If Firms Seek an Average Markup of 25% Over Labor

question 25

Multiple Choice

If firms seek an average markup of 25% over labor costs,and this is consistent with labor demands at the natural rate,then in the long run

• A) real wages will be 25% of the price level
• B) prices will be 4 times greater than wages
• C) wages will rise 80 cents for every $1 increase in prices
• D) wages will fall 25 cents for every $1 increase in prices
• E) prices will rise 25 cents for every $1 increase in wages

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Definitions:

Stimulants

Substances that increase activity in the central nervous system, leading to increased alertness, attention, and energy.

Sensory and Perceptual

Refers to the processes by which we receive, interpret, and understand sensory information from our environment.

Recreational Drug

A substance taken for pleasure or leisure purposes, rather than for medical reasons; can include legal and illegal drugs.

Widely Used

Something that is extensively accepted and utilized by a large number of people or entities.