Refer to the information provided in Figure 28.4 below to answer the question(s) that follow.
Figure 28.4Refer to Figure 28.4. The demand for labor falls from D to D'. If firms enter into social, or implicit, contracts with workers not to cut wages, then the wage rate will remain at $10 and
A. employment will remain at 300 million.
B. employment will fall to 150 million.
C. employment will fall to 200 million.
D. labor supply will decrease to restore the market to equilibrium.
Answer: B
Economics
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