If the Labor Market Is Perfectly Competitive

question 38

Multiple Choice

If the labor market is perfectly competitive:

• A)the equilibrium wage will be equal to the minimum wage.
• B)the rate of unemployment will be zero.
• C)the wage rate will be the same in all the industries.
• D)the demand for labor will be perfectly inelastic.

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Definitions:

Earnings Retention Ratio

The portion of a company's profits that is reinvested in the business rather than distributed to shareholders as dividends.

Market Capitalization Rate

The expected return on an investment in the market, derived from the collective appraisal of all investors' expectations of future market performance.

Present Value of Growth Opportunities

A valuation method that estimates the current worth of a company's future investment opportunities, considering the time value of money.

ROE

Return on Equity, a measure of a corporation's profitability that reveals how much profit a company generates with the money shareholders have invested.