Which of the following is true of labor market competition?
A. An indirect payment such as Social Security, a major component of labor costs, is not included in calculating the average cost of an employee.
B. Labor market competition places a lower bound on pay levels.
C. The labor market places an upper bound on labor costs and compensation.
D. The upper bound placed by the labor market is more constrictive when labor costs are a very small share of the total costs.
E. The labor market focuses primarily on competing through providing a quality product or service at a competitive price in the market.
Answer: B
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