If the Motor Vehicle Builders' Union Successfully Negotiates a Wage

question 136

Multiple Choice

If the Motor Vehicle Builders' Union successfully negotiates a wage increase for its members, how does the wage hike affect the supply of cars?

• A) The quantity supplied decreases.
• B) The supply increases.
• C) The supply decreases.
• D) The quantity supplied increases.
• E) Both answers B and D are correct.

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Definitions:

Risk Premium

The risk premium is the additional return an investor requires for choosing a risky investment over a risk-free asset, compensating for the extra risk undertaken.

Arithmetic Average Return

The simple average of a series of returns generated over a period of time.

Variance

A statistical measurement of the dispersion of returns for a given security or market index, indicating volatility.

Time Horizon

The length of time over which an investment is expected to be held or a financial goal is to be achieved.