Which of the following statements about product market competition and labor market competition is true?
A)An organization that has higher labor costs than its product market competitors will have to charge lower average prices for products of similar quality.
B)The upper bound placed by the labor market is more constrictive when labor costs are a larger share of total costs.
C)Product market competition places an upper bound on labor cost whereas, labor market competition places a lower bound.
D)Product market competition is the amount an organization must pay to compete against other companies that hire similar employees.
E)Indirect payments are not considered while calculating the average cost per employee.

Question

Quizplus · Accepted Answer

The product market competition places an upper bound on labor costs and compensation. This upper bound is more constrictive when labor costs are a larger share of total costs and when demand for the product is affected by changes in price (i.e., when demand is elastic). Labor market competition places a lower bound on pay levels.

Which of the Following Statements About Product Market Competition and Labor