Suppose a Union Successfully Negotiates a Wage Rate for Its

question 25

Multiple Choice

Suppose a union successfully negotiates a wage rate for its members that is above the competitive wage rate, then

• A) employment in the union sector will increase.
• B) the union must find a way to make union workers more productive.
• C) the union must also negotiate a fringe-benefit package that the membership will like.
• D) the union must find a way to ration jobs among the excessive number of workers who wish to work at the negotiated wage.

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Definitions:

Black Scholes Model

A mathematical model used for pricing European call and put options, evaluating the options' theoretical value based on several factors including time, price, volatility, and the risk-free interest rate.

Exercise Price

The price at which the holder of an option can buy (for a call option) or sell (for a put option) the underlying asset.

Standard Deviation

A measure of the dispersion or variation in a set of values, indicating how much the numbers in the set deviate from the mean (average).

Risk-free Rate

This is the theoretical rate of return of an investment with zero risk, typically represented by the yield on government securities.