Suppose That Due to an Increase in the Price of Steel

Multiple Choice

Suppose that due to an increase in the price of steel, Chrysler had to raise prices on its automobiles, and as a result its sales declined. Due to the decline in sales, Chrysler chose to lay off some employees rather than cut employee wages because of an unspoken agreement between its employees and Chrysler executives that wages would not be reduced. This example is consistent with the

A) relative-wage explanation of unemployment.
B) implicit contract explanation of unemployment.
C) explicit contract explanation of unemployment.
D) efficiency wage explanation of unemployment.