Union leaders who want to avoid layoffs for their members sometimes negotiate lower wages during recessions. If the wages for unionized workers at bakeries fall, the price of bread falls because
A) bread is an essential food.
B) lower input prices decrease demand.
C) this is a cost-saving technology.
D) lower input prices increase supply.
E) the lower wage was voluntary.

Question

Quizplus · Accepted Answer

When the wages for unionized workers at bakeries fall, the input cost for producing bread decreases. As per the law of supply, with a decrease in input costs, the supply of bread will increase, leading to a fall in its price. Hence, option D is the correct answer. Option A is not relevant here as it does not explain why the price of bread falls. Option B is incorrect because lower input prices will increase the profitability of a business, hence it is unlikely to lead to a decrease in demand. Option C is incorrect as cost-saving technology may increase production efficiency, but it is not directly related to the price of bread. Option E is also incorrect as it does not explain how the lower wage voluntary or not, leads to a fall in the price of bread.

Union Leaders Who Want to Avoid Layoffs for Their Members