When the Possibility for Strongly Efficient Contracts Occurs, What Will

question 30

Multiple Choice

When the possibility for strongly efficient contracts occurs, what will happen?

• A) The union and firm negotiate over the employment level but not over the wage.
• B) The union and firm negotiate over the wage level but not over the employment level.
• C) The labor demand curve must be vertical.
• D) Isoprofit lines must be horizontal.
• E) Isoprofit lines are parabolas that open upward.

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Definitions:

Price Fixing

An illegal agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price or maintain the market conditions so that the price is maintained at a given level by controlling supply and demand.

Tying Arrangement

A sales strategy where a seller requires a buyer to purchase a secondary product as a condition of purchasing a desired primary product.

Exclusive Territorial Distributorship

A distribution strategy where a manufacturer grants exclusive rights to distribute its products in a specific territory to a single distributor.

Cease and Desist Order

A legal order issued by a court or government authority demanding that an individual or organization stop a specified activity immediately.