n the southern part of the country Nirobia, the workers at a factory owned by Mambiki & Co. have gone on a strike dema
Posted: Fri Jul 01, 2022 7:56 am
n the southern part of the country Nirobia, the workers ata factory owned by Mambiki & Co. have gone on a strikedemanding higher wages. Mambiki & Co. is a firm thatproduces auxiliary defense equipment for aircraft. A nationalbusiness daily reports that following the closure of the factoryfor 6 weeks, the management has finally agreed to the wagehike. Kiah Desmond and her friend Rania Ali, both studentsof economics, are discussing the news report in class. Kiahargues that the factory's profits are likely to fall due tothe wage hike. Rania on the other hand feels that Mambiki willincrease the price of their products in order to compensate for theincrease in costs.
Rania's argument is based on the assumption that:
A.
The labor union at the factory has strong bargaining power.
B.
The number of buyers in the defense equipment market is verysmall.
C.
Mambiki has factories producing defense equipment in other partsof the world as well.
D.
Mambiki's fixed costs are already high.
E.
The demand for Mambiki's defense equipment isinelastic.
Rania's argument is based on the assumption that:
A.
The labor union at the factory has strong bargaining power.
B.
The number of buyers in the defense equipment market is verysmall.
C.
Mambiki has factories producing defense equipment in other partsof the world as well.
D.
Mambiki's fixed costs are already high.
E.
The demand for Mambiki's defense equipment isinelastic.