A firm’s employees become members of a trade union, and it negotiates a rise in the workers’ wage rate. As a result of the higher wage rate, the number employed by the firm increases. 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.