If the Labour Union Acts to Maximize the Economic Rent

question 5

Multiple Choice

If the labour union acts to maximize the economic rent that its members receive, what will happen to employment and wages?

• A) Wage will be lower than in the case of the absence of a labour union.
• B) Employment will be lower than in the case of the absence of a labour union.
• C) We cannot tell what the effect on employment would be, but wages will be higher than they would be in the absence of a union
• D) Employment will be higher than in the case of the absence of a labour union.
• E) We cannot tell what the effect on wages would be, but employment will be higher than it would be in the absence of a union

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Definitions:

Selling And Administrative Expenses

Combined costs related to the selling of products and the administration of a business, excluding production costs.

Retention Ratio

The proportion of net income that is retained in the business rather than paid out to shareholders as dividends, indicating the amount reinvested in the company.

Interest Expense

This is the cost incurred by an entity for borrowed funds over a period of time, typically expressed as an annual percentage.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including materials and labor.