Suppose that workers in the food service industry go on strike during an economic downturn because they are unwilling to accept a cut in their wages unless they know that workers in other industries are receiving similar wage cuts. This example is consistent with the

Question

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The situation described in the scenario is consistent with the relative-wage explanation of unemployment, which states that workers are more likely to be unemployed when the wage they demand is higher than the market wage for similar jobs. In this case, the food service workers are unwilling to accept a wage cut unless they know that workers in other industries are also experiencing similar wage cuts, suggesting that they are concerned with maintaining a relatively high wage compared to other industries.

Suppose That Workers in the Food Service Industry Go on Strike