Which of the following is not a reason why wages respond slowly to changes in output?
A) Many labor contracts specify wages for up to three years.
B) The process of wage setting in large corporations is slow moving.
C) Frequent wage changes can reduce worker morale and reduce productivity.
D) Firms benefit from having a reputation of paying stable wages.
E) The labor supply and demand curves move rapidly to clear labor markets.

Question

Quizplus · Accepted Answer

This statement is actually false. The labor supply and demand curves can move rapidly to clear labor markets, but the speed at which they adjust depends on factors such as the availability of alternative job opportunities and the ease of finding new workers. The other options given (A-D) all provide valid reasons for slow wage adjustment.

Which of the Following Is Not a Reason Why Wages