If, as a Result of Imperfect Information, Firms Set Their

question 110

Multiple Choice

If, as a result of imperfect information, firms set their wage rates ________ the market clearing wage rate, there will be a surplus of workers.

• A) above
• B) below
• C) at
• D) above or below

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Definitions:

Sunk Cost

Costs that have already been incurred and cannot be recovered or changed.

Make or Buy

A decision-making process in which a company chooses between manufacturing a product internally or purchasing it from an external supplier.

Significant Sunk Costs

Expenses that have already been incurred and cannot be recovered or changed.

Avoidable Cost

Costs that can be eliminated if a certain decision is made, not incurred if a particular activity is avoided.