A Firm Negotiates a New Labor Contract with a Higher

question 7

Multiple Choice

A firm negotiates a new labor contract with a higher average hourly wage.What is the most likely effect of the higher wage on the firm's price and output?

• A)Both price and output will not be affected.
• B)Price will increase but output will not change.
• C)Both price and output will increase.
• D)Price will not change but output will decrease.
• E)Price will increase but output will decrease.

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Definitions:

Payable

Refers to an amount of money that is owed and should be paid, often within a specific period of time.

Clarity

The quality of being easily understood or free from ambiguity.

Order Instrument

A negotiable instrument that is payable “to the order of an identified person” or “to an identified person or order.”

Payee

The individual or entity to whom a check, draft, or note is made payable.