In a market system, a firm's employees are typically shielded from business risk by:
A) Profit-sharing agreements
B) Wage contracts
C) The Social Security program
D) Paid vacation leaves

Question

Quizplus · Accepted Answer

Wage contracts provide a certain level of stability for employees, as they are guaranteed a set wage regardless of the firm's performance. This shields them from the business risk that the firm may face. Profit-sharing agreements would provide employees with a share of the firm's profits, which would increase their exposure to business risk. The Social Security program and paid vacation leaves are not directly related to shielding employees from business risk in a market system.

In a Market System, a Firm's Employees Are Typically Shielded