The employees of a firm belong to a trade union that negotiates for an increase in the workers’ wage rate. As a result, the rise in the wage rate leads to a larger number of workers being employed by the firm. What might 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.