Suppose That Firm a Has a Low Layoff Rate While

question 19

Multiple Choice

Suppose that Firm A has a low layoff rate while Firm B has a high layoff rate.Assume both of the firms employ the same number of workers on average.Under the current unemployment insurance program:

• A) both firms pay the same amount of unemployment insurance.
• B) firm B subsidizes the layoffs of Firm A.
• C) firm A subsidizes the layoffs of Firm B.
• D) the average unemployment benefit to Firm B workers is reduced.

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Definitions:

Elastic Demand

A situation in which the demand for a product is sensitive to price changes, meaning the quantity demanded significantly increases or decreases as the price decreases or increases.

Copper Electrical Wire

A type of wire made from copper used for conducting electricity, known for its high conductivity and flexibility.

International Copper Cartel

An agreement among some of the world's major copper-exporting countries to limit supply in order to maintain or increase copper prices.

Kinked-Demand Model

A model in oligopoly markets, suggesting that firms might face a demand curve that has a sharp bend or "kink" at the current price, leading to sticky prices.