Suppose That a Union Successfully Negotiated a 10 Percent Wage

question 53

Multiple Choice

Suppose that a union successfully negotiated a 10 percent wage increase and the quantity of labor demanded increased by 10 percent. We can conclude that

• A)the labor demand curve must have independently shifted to the right.
• B)labor demand is highly elastic.
• C)the coefficient of labor demand elasticity is less than 1.
• D)labor demand is unit-elastic.

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Definitions:

Accounts Receivable

Money owed to a company by its clients or customers for goods or services delivered but not yet paid for.

Accounts Payable

Money owed by a business to its suppliers shown as a liability on the company’s balance sheet.

Statement of Cash Flow

A financial statement that provides aggregate data regarding all cash inflows a company receives from its ongoing operations, investment activities, and financial activities, as well as all cash outflows that pay for business activities and investments during a given period.

Operating Activities

The day-to-day actions that involve the production, sales, and delivery of a company's product or service, which are reflected in its cash flows.