The Demand for Unionized Labor Will Generally Be More Elastic

question 36

Multiple Choice

The demand for unionized labor will generally be more elastic, and it will be more difficult for the union to achieve above-equilibrium wages when

• A) there are no close substitutes for the unionized workers.
• B) the domestic producers of the good produced by the unionized workers face weak competition from foreign suppliers of the good.
• C) the cost of employing the unionized workers is a large part of the total cost of the product that they produce.
• D) the demand for the product produced by the unionized workers is highly inelastic.

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Definitions:

Real Options

The value of additional decision-making opportunities available to a business when investing, likened to financial options.

Cash Flow

The amount of cash and cash equivalents being transferred into and out of a business, indicating its liquidity position.

Net Present Value

Net present value (NPV) is the calculation used to find today’s value of a future stream of payments and earnings, accounting for the time value of money.

Cost of Capital

The return rate that a company must achieve in order to compensate its investors for the risk of the investment, including the cost of equity and debt.