In the Context of Quasi-Fixed Labour Costs, the "Buffer" Refers

question 3

Multiple Choice

In the context of quasi-fixed labour costs, the "buffer" refers to a gap between the value of the marginal revenue product of a worker and his/her wage. Which of the following statements is false?

• A) It is consistent with labour hoarding behaviour on the part of firms.
• B) When labour demand rises, employment might not rise by as much.
• C) When labour demand falls, employment might not fall by as much.
• D) The buffer is created by the presence of quasi-fixed labour costs.
• E) None of choices are correct.