If Wage Rigidity Holds the Real Wage Above the Equilibrium

question 41

Multiple Choice

If wage rigidity holds the real wage above the equilibrium level, an increase in the demand for labor will ______ the number unemployed.

• A) increase
• B) decrease
• C) not change
• D) possibly increase, decrease, or leave unchanged

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Definitions:

Long-Run Cost Function

Describes the minimum cost at which a firm can produce any given level of output when all inputs, including capital, are variable.

Positive Output

The result of production processes that lead to an increase in the quantity of goods or services produced.

Long-Run Total Cost

The cumulative expense incurred by a firm when all inputs are variable, intended to capture the idea of planning and adjustment in the face of changing economic landscapes.

Maximize Profits

A business objective aiming to achieve the highest possible financial gain by managing costs and optimizing revenue streams in a given market environment.