Suppose that during a recession, Whirlpool saw the demand for its major appliances fall by one-third. Even though the demand decreased, Whirlpool chose to maintain wages for its non-union employees. This is an example of
A. an explicit contract not to cut wages.
B. an implicit or social contract not to cut wages.
C. a relative-wage contract.
D. employment-at-will.
Answer: B
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Based on Table 3.1, if the world price of computers is four pairs of shoes, then the optimal strategy for each country would be
A) to specialize in shoes. B) to specialize in computers. C) for Mexico to specialize in shoes, and the United States in computers. D) for the United States to specialize in shoes, and Mexico in computers. E) None of the above.
If workers are homogeneous and face a monopsonist,
A) they are likely to want to form a union. B) they are likely to want to negotiate one-on-one with their employer. C) it is likely that half will want to form a union, half will not. D) they are likely to move to another town.
With a price floor:
A. producer surplus will increase if profits increase. B. producer surplus will increase is profits fall. C. producer surplus will decrease if profits increase. D. producer surplus always decreases.
If the price level in the U.S. decreases, aggregate output demanded: a. decreases because U.S. products become cheaper relative to foreign products
b. decreases because U.S. products become more expensive relative to foreign products. c. increases because U.S. products become cheaper relative to foreign products. d. increases because U.S. products become more expensive relative to foreign products. e. decreases because household wealth and spending in the U.S. decrease.