Demand for Workers in Some Industry Declines

question 37

Multiple Choice

Demand for workers in some industry declines.These workers are reluctant to have a cut in their nominal wage.However,

• A)inflation will raise their real wage and so increase the number of available workers.
• B)inflation will raise their real wage and so decrease the number of available workers
• C)inflation will reduce their real wage and so increase the number of available workers.
• D)inflation will reduce their real wage and so decrease the number of available workers.

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Definitions:

Cournot Equilibrium

A situation in oligopoly markets where each firm chooses the quantity to produce to maximize its profit, assuming the quantities of its rivals are fixed.

Price Elasticity

A measure of how much the demand or supply of a product changes in response to a price change.

Cournot Equilibrium

A model of market competition in which firms choose their output levels simultaneously and independently to maximize profit with the assumption of no further entry by other firms.

Marginal Cost

Marginal cost denotes the change in the total expense incurred by a firm when its output is increased by a single unit.