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.
C
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A flat IS curve implies that
A) an increase in money supply will change output by a relatively small amount. B) a decrease in taxes will change output by a relatively large amount. C) changes in money supply will have large multiplier effects on output. D) A and B.
Where monopsony exists, ____ workers will be hired at ____ wages than if perfect competition prevailed in a labor market
a. fewer; lower b. fewer; higher c. more; lower d. more: higher