Suppose a Perfectly Competitive Industry Is in Long-Run Equilibrium

question 253

Multiple Choice

Suppose a perfectly competitive industry is in long-run equilibrium. If a decrease in demand leads to a lower long-run price, we know that

• A) this is a decreasing-cost industry.
• B) this is an increasing-cost industry.
• C) some firms will be losing money in the long run.
• D) after further adjustments, price will rise to its original level.

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Definitions:

Pure Monopsony Power

A market condition where there is only one buyer for a product or service, giving that buyer significant control over prices.

Strike and Lockout

Labor disputes where employees refuse to work (strike) and employers prevent employees from working (lockout) to settle disagreements, typically over employment terms.

Union Shop

A workplace where new employees must join the union representing them within a certain period of time as a condition of their employment.

Taft-Hartley Act

A 1947 U.S. federal law that restricts the activities and power of labor unions.