Impact of inflation on clothing manufacturer nominal profit

Reference no: EM131774857

Question: A clothing manufacturer employs casual sales staff on an as-needed basis at the legal minimum hourly wage. At the same time, the owner of the outlet enters into a fixed-term contract with a department store to supply clothing to the store. Other things being equal and assuming that wage and supply costs are the only costs, what is the most likely impact of inflation on the clothing manufacturer's nominal profit?

a. Nominal profit will increase regardless of the relative share of wage and supply costs

b. Nominal profit will increase only if wage costs are less than supply costs

c. Nominal profit will increase only if wage and supply costs are equal

d. Nominal profit will increase only if wage costs are greater than supply costs

Reference no: EM131774857

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