Suppose that the new trade deal between the UK and the EU is less favourable to conducting business and exporting abroad than being part of the single market. As a result, the degree of competition between firms in the UK falls. (a) What is the effect of this trade deal on the number of firms in the long run and the equilibrium markup? b) Using the WS-PS diagram, illustrate the effect on real wages and equilibrium unem- ployment in the long run.

Suppose that the new trade deal between the UK and the EU is less favourable to conducting business and exporting abroad than being part of the single market. As a result, the degree of competition between firms in the UK falls. (a) What is the effect of this trade deal on the number of firms in the long run and the equilibrium markup? b) Using the WS-PS diagram, illustrate the effect on real wages and equilibrium unem- ployment in the long run.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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