Given an 8 Percent Increase in Wages, Firm a Cuts

question 22

Multiple Choice

Given an 8 percent increase in wages, firm A cuts back on labor more than firm B. It follows that, ceteris paribus,

• A)there are likely fewer substitutes for labor in firm B than firm A.
• B)there are likely fewer substitutes for labor in firm A than firm B.
• C)sunk costs are greater for firm A than firm B.
• D)the demand for the product that firm A produces is likely less elastic than the product that firm B produces.
• E)a and d

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Definitions:

Primacy Judgments

The tendency for the first items presented in a series to be better remembered or more influential than later items.

Attributional Judgments

The process of explaining the causes of behaviors and events, which can influence personal perceptions and social interactions.

Person Perception

The process by which individuals form impressions of others and make judgments about their attributes and characteristics.

Snap Judgments

Quick decisions or evaluations made without thorough consideration or reflection.