In a Perfectly Competitive Industry, Do Higher Wages for Labor

question 78

Multiple Choice

In a perfectly competitive industry, do higher wages for labor union members diminish profits?

• A)Yes, in the short run, but not in the long run in which some firms exit the industry because of higher costs.
• B)Yes, in the long run, but not in the short run because profits are always fixed in the short run.
• C)No, higher wage costs can affect profits only if they affect labor productivity and this doesn't happen.
• D)No, because higher labor costs usually bring more firms into the industry and this effect dampens price rises.

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Definitions:

Prospective Memory

It represents the part of memory that deals with recalling planned activities or intentions at a predetermined time in the future.

Odor

A smell produced by one or more volatilized chemical compounds that are generally found in low concentrations.

Context-Dependent Memory

The theory that information learned in a particular situation or environment is better remembered when in that same environment.

Maintenance Rehearsal

A cognitive process that involves repeatedly verbalizing or thinking about a piece of information to keep it in short-term memory.