The Relative-Wage Explanation for the Existence of Downwardly Sticky Wages

question 25

Multiple Choice

The relative-wage explanation for the existence of downwardly sticky wages emphasizes

• A) unspoken agreements between workers and firms that firms will not cut wages.
• B) the incentive that firms may have to hold wages above the market clearing rate.
• C) employment contracts that stipulate workers' wages, usually for a period of one to three years.
• D) the contention that workers in one industry may be unwilling to accept a wage cut, unless they know that workers in other firms and industries are receiving similar cuts.

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Definitions:

Customer Returns

Merchandise that has been sold and later returned by the customer.

External Failure Cost

Expenses associated with defects that are found by the customer after the product has been delivered, including returns, repairs, and warranty claims.

Warranty Period

The specific timeframe during which a manufacturer or seller commits to repairing or replacing defective products at no charge to the customer.

Software Errors

Mistakes or faults in a computer program that cause it to produce incorrect or unexpected results or to behave in unintended ways.