If Company a Raises Its Pay Rate by One Dollar

question 31

Multiple Choice

If Company A raises its pay rate by one dollar per hour to hire additional workers and competitors immediately match the increase, what will be the most likely result?

• A)The labor costs for Company A will increase, but it will be unable to hire additional workers.
• B)Company A will hire the needed workers at a higher wage rate.
• C)Competitors of Company A will lose employees to Company
• D)Company A will hire higher quality workers.

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Definitions:

Positive Externality

A beneficial effect experienced by a third party due to a transaction or activity they were not involved in.

Property Values

The worth of real estate as determined by market conditions and the property's condition, location, and other factors.

Renovates

The process of improving or updating a building, room, or structure to make it more attractive or functional.

Marginal Social Benefit

The additional gain to society as a whole from producing or consuming one more unit of a good or service.