Given an 8 Percent Increase in Wages, Firm a Cuts

Multiple Choice

Given an 8 percent increase in wages, firm A cuts back on labor more than firm B. It follows that, ceteris paribus ,

A) there are likely fewer substitutes for labor in firm B than firm A.
B) there are likely fewer substitutes for labor in firm A than firm B.
C) sunk costs are greater for firm A than firm B.
D) the demand for the product that firm A produces is likely less elastic than the product that firm B produces.