A firm’s employees become members of a trade union that bargains for a rise in the workers’ wage rate. The higher wage rate leads to a rise in the number employed by the firm. What could account for this?
- AThe demand for the firm’s product is price-elastic.
- BThe firm is a monopsonist within its local labour market.
- CThe firm operates in a perfectly competitive labour market.
- DThere is a high degree of substitutability between capital and labour.