Exhibit 27-9 ​ Refer to Exhibit 27-9. Let D_A and D_B Represent Demand

question 88

Multiple Choice

Exhibit 27-9 ​

Refer to Exhibit 27-9. Let D_A and D_B represent demand for labor curves facing unions A and B, respectively. As a result of their efforts, both unions succeed in increasing the wage rate from W₁ to W₂. In terms of the wage-employment trade-off, the wage increase

• A)had a larger impact on employment for union A than for union B.
• B)had a larger impact on employment for union B than for union A.
• C)had the same impact on employment in both unions.
• D)cannot be determined without further information.

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Definitions:

Fair-value Hedge

A strategy used in accounting to mitigate the risk of changes in the fair value of an asset, liability, or firm commitment through derivative contracts.

Cash-flow Hedge

A hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with an asset or liability or a forecasted transaction.

Purchase Order

An official document issued by a buyer committing to pay the seller for the sale of specific products or services.

Fair-value Hedge

A hedge of the exposure to changes in the fair value of an asset or liability or an unidentified firm commitment that could affect profit or loss.