If the good or service produced by a company has an inelastic demand then during bargaining
A) the union may demand higher wages as the additional cost may not negatively impact the company.
B) the union will not likely be able to demand higher wages as the costs cannot be transferred to the customer.
C) it will not impact the unions ability to obtain higher wages in bargaining.
D) the union will demand greater job security for its employees as demand for the good or service will fall.
E) the company will resist any demands for wage increases, as any increase in the sale price will reduce demand .

Question

Quizplus · Accepted Answer

When demand for a good or service is inelastic, it means that consumers are less sensitive to price changes. Therefore, a company can pass on the higher costs of wage increases to consumers without a significant reduction in quantity demanded. This gives unions leverage to demand higher wages, knowing that the company can maintain its revenue by increasing prices.

If the Good or Service Produced by a Company Has