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Card 9 / 15:
A market in perfect competition is in long-run equilibrium. What happens to the market if labor unions are able to increase wages for workers?
When wages increase, costs of production increase. Some firms would now be making economic losses and would shut down. The supply curve then starts shifting to the left, pushing the market price up. This process ends when all firms remaining in the market earn zero economic profits. The result is a contraction in the output produced in the market.
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