A former union employee states: "We were on strike for two years. I know the eventual wage increase we received will never make up for the wages I lost, but I think the strike was worth it. We forced the company to give in to our demands." Evaluate these comments
If income were the only thing that mattered, this statement might be puzzling. However, this former employee asserts that something mattered more to him than income. Emotional issues often come into play during labor/management conflicts, and the union's victory apparently gave this person more utility than he thought the lost income would have yielded.
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In the short run, if the Fed wants to raise the federal funds rate, it
A) instructs large commercial banks to sell government securities in the open market. B) instructs the New York Fed to buy government securities in the open market. C) instructs the New York Fed to sell government securities in the foreign exchange market. D) instructs the New York Fed to sell government securities in the open market. E) tells large commercial banks to raise their interest rates.
In the figure above, the DLF curve is the demand for loanable funds curve and the PDLF curve is the private demand for loanable funds curve. If there is no Ricardo-Barro effect, the figure shows a situation in which the government has a budget
A) deficit of $1 trillion. B) deficit of $1.5 trillion. C) surplus of $0.5 trillion. D) deficit of $0.5 trillion. E) surplus of $1 trillion.