Other Things Held Constant in a Competitive Labor Market, If

question 100

Multiple Choice

Other things held constant in a competitive labor market, if workers negotiate a contract in which the employer agrees to pay an hourly wage rate of $17.85 while the market equilibrium hourly wage rate is $16.50, the:

• A) quantity of workers supplied will exceed the quantity of workers demanded.
• B) quantity of workers demanded will exceed the quantity of workers supplied.
• C) demand for labor will increase until the equilibrium wage rate is $17.85.
• D) supply of labor will decrease until the equilibrium wage rate is $17.85.

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Definitions:

Past Performance

Indicates the historical financial results or operational achievements of a company, used as an indicator of potential future results.

Future Returns

The projected earnings or losses on an investment over an upcoming period.

Efficient Markets Hypothesis

A theory that asserts that financial markets are "informationally efficient", meaning that prices of securities fully reflect all available information at any point in time.

EMH

Efficient Market Hypothesis, a theory that suggests all available information is already reflected in stock prices, hence making it difficult to achieve consistently higher returns.