The one quirk that labor markets have, which helps explain why unemployment goes up so much in a recession is that:
A) A price floor called a "minimum wage law" exists for the labor market
B) Wages are flexible upward but "sticky" downward
C) Firms are "demanders" of labor, rather than suppliers
D) Machines could "replace" humans in the labor market

Question

Quizplus · Accepted Answer

Labor markets have wages that are flexible upward but "sticky" downward. This means that in a recession, firms may not reduce wages enough to keep up with the decrease in demand for labor. As a result, firms may choose to lay off workers instead of reducing wages, leading to higher unemployment rates.

The One Quirk That Labor Markets Have, Which Helps Explain