Question

When a factory closes, why is it bad news for the local restaurants? a. Unemployed factory workers have lower incomes and are less likely to dine out. b. Unemployed factory workers are eligible for government unemployment benefits. c. Sales taxes are likely to increase. d. The opportunity cost of dining out has fallen.

Answer 1

Answer:

The correct answer is option a.

Explanation:

When a factory closes, its workers become unemployed. Their income declines or disappears. A decrease in income further causes decrease in demand and consumption.

The factory workers will no longer be able to afford restaurant meals, or their demand for meals will decline.

A decline in the demand for meals will adversely affect the revenue and profits of local restaurants.

So, closing up of a factory is a bad news for local restaurants.