Suppose a firm signs a long-term contract with its workers that promises to pay workers full pay regardless of how much output is actually produced.
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Suppose a firm signs a long-term contract with its workers that promises to pay workers full pay regardless of how

much output is actually produced. What effect will this have on the firm's marginal cost and how might this affect the credibility of the firm's entry deterrence strategy?

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The effect of full pay irrespective of output produced on the marginal... View the full answer

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