Within the Perfectly Competitive Market Structure, Consider a Labor Union

Multiple Choice

Within the perfectly competitive market structure, consider a labor union that manages to obtain higher wages for its members. At the time the union obtains higher wages, the perfectly competitive firms are earning positive economic profits. It follows that

A) initially higher wages will reduce profits.
B) in the long run product prices will be higher because of higher wages.
C) in the long run the firms in the industry will earn below normal profits.
D) in the short run the firms in the industry will necessarily earn below normal profits.
E) a and b