Consider a nation in which most workers are unionized. If all the nation's unions band together and succeed in boosting wages established by long-term labor contracts, then
A) there is a leftward shift in just LRAS.
B) there is a leftward shift in both LRAS and SRAS.
C) there is a rightward shift in just SRAS.
D) there is a rightward movement along the SRAS curve.
B
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If a 10 percent price increase generates a 10 percent decrease in quantity demanded, then demand is
A) unit elastic. B) elastic. C) perfectly inelastic. D) perfectly elastic. E) inelastic.
The theory of perfect competition is built on several assumptions, including that
A) the individual firm can affect the price of the product it sells. B) any firm can easily enter or leave the industry. C) the individual firm can influence demand by advertising. D) there are few producers of an identical product. E) each firm must earn economic profits to remain in the industry.