Refco Is Company That Manufactures Parts of a Car Engine

question 5

Multiple Choice

Refco is company that manufactures parts of a car engine for two major car manufacturers.It decides to shut down an assembly line that produces parts that are specially tailored for one of the car manufacturers.The other manufacturer then increases its order for parts made by Refco.In this example,Refco was practicing a _____.

• A)loss leader strategy
• B)price gouging strategy
• C)commitment strategy
• D)cost plus pricing strategy

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Definitions:

Minimum-Wage Law

Legislation that sets the lowest hourly wage rate that employers can legally pay their workers.

Equilibrium Wage

The wage level at which the quantity of labor demanded by employers matches the quantity of labor supplied by workers, leading to a stable employment situation.

Labor Supplied

Labor supplied refers to the total hours that workers in an economy are willing and able to work at a given wage rate.

Unemployment Insurance

A government program that provides temporary financial assistance to workers who have lost their job and meet certain eligibility requirements.