If Firms in a Competitive Market Have Different Cost Functions

question 19

Multiple Choice

If firms in a competitive market have different cost functions, then

• A)there is no short run market supply curve.
• B)the market supply curve reflects those firms' operating envelopes, even in the short run.
• C)some of the firms will shut down because their costs are too high to compete.
• D)the firms' marginal costs will be different at the market price.

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Definitions:

Objective Standard

A benchmark or criterion that is not influenced by personal feelings, interpretations, or prejudice, used to make fair and impartial decisions.

Union Contracts

Legally binding agreements between unions and employers detailing wages, hours, and working conditions for employees.

Management Rights Clause

A provision often found in collective bargaining agreements that delineates certain functions and decisions that are reserved for management's discretion.

Union Security Clause

A union security clause in a collective bargaining agreement requires all employees in the bargaining unit to become union members or pay union dues, ensuring union support and financial stability.