Refer to the Following

question 7

Multiple Choice

refer to the following diagram
-Which one of the following best explains the differences in the isoprofit curves of the two firms?

• A)X has lower profits than Y because X is paying higher wages
• B)X has higher profits than Y because X's high wages attract workers who are less relaxed and thereby less likely to shirk on the job
• C)X pays a higher cost than Y for providing additional informality
• D)Y pays a higher cost than X for providing additional informality

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Definitions:

Structural Unemployment

A form of unemployment that arises from a mismatch between the skills that workers offer and the skills demanded by employers, often due to technological changes or market shifts.

Frictional Unemployment

Unemployment that occurs when people are between jobs or are entering the labor force for the first time.

Cyclical Unemployment

A type of unemployment that relates to the cyclical trends in the business cycle, increasing during recessions and decreasing in expansions.

Unemployment Spells

Periods of time during which an individual is searching for employment but is unable to find work.