Wage contracts, efficiency wages, and the minimum wage are explanations for why:

Business

1 answer:

hjlf4 years ago

7 0

Answer:

B. Wages tend to be inflexible downward

Explanation:

Wages are flexible if they react to changes in demand and supply. Profitability determines demand and supply level for wages. Flexibility in wages means that If the economy is performing well, companies should compensate their employees better.

Wage inflexibility implies that wages will not respond to changes in demand and supply. Wages do not rise or fall if the marginal productivity of labor increases or decreases. Wage contracts are agreements that tend to set compensation for workers regardless of their output. Minimum wage is a regulatory requirement that demands workers not to be paid below a set rate. Wage efficiency recommends higher than market rate compensation to motivate productivity.

The three factors do not advocate for wages to be pegged on productivity.

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What is the purpose of a free-market system?

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Answer:

D. To allow consumers and producers to make their

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Explanation:

A free-market system is the market form determined by free market forces of demand and supply.

No government intervention takes place in this form of market as in a centrally planned economic system. This non- intervention of the government prevents economic distortions in the system, which is good for the market.

In a free market system the forces of demand and supply, decide the price of the goods and thereby the output adjustments. The consumers are free to decide the demand and producers are free to decide the product the supply of goods.

Hence, it can be said that the purpose of a free-market system is to allow consumers and producers to make their own decisions.

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