Suppose that cruise ship employees are laid off during a period of significant decrease in demand for cruise vacations because they have a 3-year contract which has locked their wages into place. This example is consistent with the

Question

Quizplus · Accepted Answer

The explicit contract explanation of unemployment suggests that workers and employers agree on long-term contracts that fix wages for their duration. If demand falls and wages cannot adjust downward due to the contract, employers may lay off workers instead, which is what the scenario describes.

Suppose That Cruise Ship Employees Are Laid Off During a Period