Newly Formed Trade Unions Raise Wages for Workers in Country

question 76

Multiple Choice

Newly formed trade unions raise wages for workers in Country X where cars are manufactured. The higher wages increase costs for the car manufacturers who relocate to Country Y where labor costs are lower. Car manufacturing begins to thrive in Country Y relative to Country X. Which answer best describes the concept highlighted by this scenario?

• A) Changes in one market can affect markets and people in other regions of the world.
• B) Trade unions always cause industries to collapse.
• C) The links between markets are weakening over time.
• D) Manufacturing industries are the only industries where markets are linked well.

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Definitions:

Danfoss

A global company specialized in engineering solutions, often focusing on energy-efficient, climate-friendly technologies.

Panasonic

A multinational electronics corporation based in Japan, known for its wide range of electronics and home appliance products.

Strategic Behavior

Actions taken by firms or individuals that consider the expected reactions of other participants and attempt to optimize their own position accordingly.

Excess Capacity

The situation where a firm is producing at a level less than its maximum potential output due to insufficient demand or deliberate strategic choices.