Suppose a Perfectly Competitive Firm,which Is Initially in Long-Run Equilibrium

question 104

Multiple Choice

Suppose a perfectly competitive firm,which is initially in long-run equilibrium experiences a decrease in the wages it must pay its employees.In the short run,which of the following will occur?

• A)ATC will shift up and MC will shift down, causing the firm to incur a loss.
• B)ATC will shift down and MC will shift up, causing the firm to earn a positive economic profit.
• C)ATC and MC will shift down, causing the firm to earn a positive economic profit.
• D)ATC and MC will shift up, causing the firm to incur a loss.

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Definitions:

Company's Performance

A measure of how well a business executes its strategies and achieves its objectives.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.

Human Capital

The skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country.

Training and Development

Programs and initiatives focused on improving the skills, knowledge, and capabilities of employees through education and practical experiences.