Suppose employment and wages are determined by an implicit contract specifying a fixed wage at which workers must supply as much labour as the firm demands. Then firms earn _________ profits and workers earn __________ income during periods of high demand, compared to the alternative in which employment and wages are determined purely by competitive labour market forces. A. higher; higher B. lower; lower   C. lower; higher   D.higher; lower

Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter4: Demand And Demand: Applications And Extensions
Section: Chapter Questions
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Suppose employment and wages are determined by an implicit contract specifying a fixed wage at which workers must supply as much labour as the firm demands. Then firms earn _________ profits and workers earn __________ income during periods of high demand, compared to the alternative in which employment and wages are determined purely by competitive labour market forces. A. higher; higher B. lower; lower   C. lower; higher   D.higher; lower
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