A firm that attempts to pass along the cost of higher union wages to consumers in the form of higher prices will be more successful if the price elasticity of demand for its product is
A)Inelastic.
B)Elastic.
C)Unitary.
D)Perfectly elastic.

Question

Quizplus · Accepted Answer

If the price elasticity of demand for the product is inelastic, it means that consumers are not very sensitive to changes in the price of the product. This would allow the firm to increase prices without losing a significant number of customers, thereby passing on the cost of higher union wages to consumers.

A Firm That Attempts to Pass Along the Cost of Higher