Answer to Question #48496 in Microeconomics for kate

Question

In the short-run, a decrease in the wage rate paid by the firms making up a perfectly competitive industry has no effect in the output market. Explain why this is true/false/uncertain.

Answer 1

Statement is true. Because there is a lack of coordination in the behavior of firms and workers. And of cousre a certain length of employment contracts and contracts for the supply of raw materials and finished products does not allow to change sharply the number of output.