Other Things Equal, If Wage Rates Increase by 20 Percent

question 301

Multiple Choice

Other things equal, if wage rates increase by 20 percent, the greatest decline in employment will occur when labor costs are a

• A)large proportion of total costs and product demand is elastic.
• B)small proportion of total costs and product demand is elastic.
• C)large proportion of total costs and product demand is inelastic.
• D)small proportion of total costs and product demand is inelastic.

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Definitions:

Social Identity Theory

A psychological theory that examines how a person's self-concept is based on their membership within social groups, influencing their behavior and attitudes.

Stereotype Threat Theory

The theory that people are likely to experience anxiety when they are at risk of confirming a negative stereotype about their social group, which can impair their performance.

Social Identity Theory

A theory that explains how individuals categorize themselves and others into various social groups, leading to a sense of identity based on group membership.

Realistic Conflict Theory

A social psychological model that explains intergroup conflicts, hostility, and aggression as a result of competition over resources or status.