Employers Are Likely to Be Able to Pass on the Cost

question 21

Multiple Choice

Employers are likely to be able to pass on the cost of a wage increase if they _____.

• A) are in a competitive product market
• B) are in a concentrated industry
• C) are in a noncompetitive product market
• D) sell products that have an elastic demand

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Definitions:

Corporate Bond

A financial security issued by a corporation to raise capital, with the promise to repay the principal along with a specified interest rate to the bondholders.

Interest Rate

The percentage of a loan amount charged by a lender to a borrower for the use of assets, typically expressed as an annual percentage of the principal.

Arbitrage

The simultaneous purchase and sale of the same assets or commodities in different markets to profit from unequal prices.

Well-functioning Market

A market where resources are allocated efficiently, information is freely available, transaction costs are low, and property rights are protected.