If the United Auto Workers' Union Obtained a 15 Percent

question 25

Multiple Choice

If the United Auto Workers' Union obtained a 15 percent increase in the wages of its workers, employment in the auto industry would most likely fall if

• A) the demand for American-made automobiles was highly inelastic.
• B) American consumers considered foreign automobiles a poor substitute for American-made automobiles.
• C) the demand for American-made automobiles was highly elastic.
• D) the demand for American-made automobiles was increasing.

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Definitions:

Government

A system or group of people governing an organized community, often a state.

Maximum Price

A price ceiling set by a governing body meant to control the maximum price that can be charged for a product or service, often implemented to prevent prices from reaching levels considered too high for consumers to afford.

Equilibrium Price

The price at which the quantity of a good supplied is equal to the quantity of the good demanded.

Price Ceiling

A legal maximum price that can be charged for a good or service, intended to protect consumers.