Company a and Company B Are in the Same Industry

question 35

Multiple Choice

Company A and Company B are in the same industry, but Company A is unionized and Company B is not.Therefore, _____.

• A)it can be argued with assurance that any wage differences between the two firms are due to the presence of the union in Company A and the absence of the union in Company B
• B)it is difficult to argue with assurance that wage differences between the two firms are attributable to the presence of the union, although the possibility exists
• C)Company B has to form a union to compete with Company A
• D)any wage differences between the two firms can never be attributed to the presence of the union in Company A

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Definitions:

Output

The total quantity of goods or services produced by a firm, sector, or economy within a certain period of time.

Explicit Costs

Payments by a firm to purchase the services of productive resources.

Implicit Costs

The opportunity costs associated with a firm’s use of resources that it owns. These costs do not involve a direct money payment. Examples include wage income and interest forgone by the owner of a firm who also provides labor services and equity capital to the firm.

Total Cost

The complete amount of money required for the production of a specific quantity of goods or services, including both fixed and variable costs.