Consider two labor markets in which jobs are equally attractive in all respects other than the wage rate. All workers are equally able to do either job. Initially, both labor markets are perfectly competitive. If a union organizes workers in one of the markets, then wage rate will tend to
a. rise in both markets
b. fall in both markets
c. rise for the union job, but remain unchanged for the nonunion job
d. fall for the nonunion job, but remain unchanged for the union job
e. rise for the union job and fall for the nonunion job
E
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A perfectly competitive firm is earning an economic profit when total fixed costs increase. Assuming the firm does not shut down, in the short run the firm will
A) charge a higher price. B) produce more output so the extra revenue will cover the increased costs. C) produce less output to decrease total costs. D) continue producing the same quantity as before but will make less economic profit. E) continue producing the same quantity as before and continue making the same economic profit as before.
In the simple Keynesian framework, the price level
A) is fixed. B) varies directly with unemployment. C) varies inversely with wages. D) is indeterminate.