Which of the following is the resultant effect of a fall in …

JAMB Economics 2023 176 views
Source: JAMB · 2023

Which of the following is the resultant effect of a fall in the profit margin of producers in an economy?

  1. Unemployment will increase ✓
  2. Unemployment will fall
  3. Unemployment will remain constant
  4. Unemployment will fluctuate
Explanation

When profit margins fall, firms earn less for each unit sold. They produce less, stop hiring and may sack workers.

So unemployment will increase.

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