If Two or More Markets Are Closely Related

question 33

Multiple Choice

If two or more markets are closely related,

• A) a partial equilibrium analysis will tend to overstate the price impact of a supply shock.
• B) a partial equilibrium analysis will tend to accurately predict the price impact of a supply shock.
• C) a partial equilibrium analysis will tend to understate the price impact of a supply shock.
• D) they should be analyzed concurrently but using partial equilibrium analysis alone.

---

Definitions:

Nonunion Firms

Companies or organizations where the workforce is not represented by a labor union, often resulting in different working conditions compared to unionized settings.

Foreign Producers

Companies or individuals located outside a given country that produce goods or services for that country's market.

Union Wages

Wages negotiated by labor unions on behalf of their members, often resulting in higher pay and better work conditions compared to non-unionized workers.

Right-To-Work Laws

Laws that prohibit union shops, the requirement that employees must join a union as a condition of employment. Each state has the option to adopt (or reject) right-to-work legislation.