A Firm Negotiates a New Labor Contract with a Higher

question 31

Multiple Choice

A firm negotiates a new labor contract with a higher average hourly wage. What is the most likely effect of the higher wage on the firm's price and output?

• A) Neither price nor output will be affected.
• B) Price will increase but output will not change.
• C) Both price and output will increase.
• D) Price will not change but output will decrease.
• E) Price will increase and output will decrease.

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Definitions:

Headline

In an advertisement, large type designed to draw attention.

Puffery

A promotional statement or claim that is subjective, exaggerating the virtues of a product or service, without intending to be taken literally.

Body Copy

The main text portion of an ad.

Print Advertisement

A form of marketing communication used to promote or sell a product, service, or idea through visually appealing messages in magazines, newspapers, posters, or billboards.