Refer to the diagram and assumptions. If a union is formed in sector 1 and the union increases the wage rate from W n to W u , then employment will:
These two graphs show two sectors of the labor market for a particular kind of
labor. Relevant product markets are competitive. The two labor demand curves are identical and initially the quantities of labor employed in the two sectors are L 1 and L 1 and the wage rate in each sector is W n
A. decrease, but we cannot determine by how much.
B. decrease by 0L 2 in sector 1.
C. decrease by L 1 L 2 in sector 1.
D. increase by L 1 L 2 in sector 1.
C. decrease by L 1 L 2 in sector 1.
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Real business cycle theory emphasizes the role of
A) government spending as a cause of economic fluctuations. B) shocks to the money supply as a cause of economic fluctuations. C) demand shocks as a cause of economic fluctuations. D) technology shocks as a cause of economic fluctuations.
Suppose the demand for hot dogs decreases. In the short run, firms that produce hot dogs will experience a fall in prices, which will induce them to
A) decrease production and reduce the number of workers. B) decrease production and increase the number of workers. C) increase production and reduce the number of workers. D) increase production and increase the number of workers.