If a Company Gets Concessions from Labor in Union Negotiations

question 13

Multiple Choice

If a company gets concessions from labor in union negotiations, one would expect a(n) _____ in yields on its bonds due to an increase in

• A) increase; default risk.
• B) decrease; default risk.
• C) increase; liquidity.
• D) decrease; liquidity.

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Definitions:

Marginal Cost

The cost of producing one more unit of a good or service, which may change with the level of output.

Fixed Cost

Expenses that remain constant regardless of production or sales volume, including rent, salaries, and insurance.

Total Cost

The total of all costs associated with producing goods or services, encompassing both constant and fluctuating expenses.

Variable Cost

Variable cost is a cost that varies directly with the level of production or sales volume, such as materials and labor costs.