An Increase in Productivity Will Cause Which of the Following

question 11

Multiple Choice

An increase in productivity will cause which of the following according to the price- setting behaviour of firms?

• A) An increase in the markup set by firms.
• B) An increase in the level of employment protection set by the government.
• C) An increase in the prices set by firms.
• D) An increase in the minimum wage paid by firms.
• E) An increase in the real wage paid by firms.

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Definitions:

Residual Income

The net income an investment or business venture generates above the minimum rate of return.

Minimum Required Rate

The lowest return rate that an investor or project manager would accept for an investment.

Residual Income

Income that remains after all costs and expenses, including minimum required return on investment, have been subtracted.

Operating Assets

Long-term assets used in the operations of a business, including property, plant, and equipment, that generate income.