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If a Firm Can Offer Fringe Benefits Worth More Than

Question 2

Multiple Choice

If a firm can offer fringe benefits worth more than one dollar for a one dollar reduction in wages:


A) the wage-fringe isoprofit line will be upward-sloping
B) the wage-fringe isoprofit line will have a slope less than one in absolute value
C) the marginal rate of substitution between wages and fringe benefits will be greater than one at the wage-fringe optimum
D) as a proportion of total compensation,fringe benefits will likely exceed one half

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