Given a 10 Percent Decrease in Wages, Firm a Hires

question 39

Multiple Choice

Given a 10 percent decrease in wages, firm A hires more labor than firm B. It follows that, ceteris paribus ,

• A)the elasticity of demand for the product that firm A produces is likely lower than the elasticity of demand for the product that firm B produces.
• B)firm A likely has a lower labor cost-total cost ratio than firm B.
• C)firm A likely has more substitutes for labor than firm B.
• D)firm A likely has higher per-unit costs than firm B.

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Definitions:

Nativity

The birth of Jesus Christ, often depicted in Christian art and celebrated as a major holiday on December 25th.

Wren's Design

Refers to the architectural work of Sir Christopher Wren, most notably his design of St. Paul's Cathedral in London.

Saint Paul's Cathedral

A landmark church in London, England, designed by Sir Christopher Wren, notable for its distinctive dome and role in British national events.

Et in Arcadia Ego

A Latin phrase that translates to "Even in Arcadia, there am I" often interpreted as a memento mori, reflecting on the presence of death even in idyllic settings.