A . Explain the difference between a closed shop and a union shop. b. Which of these would firms prefer? Why? c. Which of these would unions prefer? Why?

a . A closed shop is an arrangement in which a firm may hire only union labor. A union shop is an
arrangement in which a firm may hire nonunion labor, but every nonunion worker hired must join the
union within a specified time period.
b. Firms would prefer a union shop because this arrangement safeguards the firm's right to employ as
many workers as it wants.
c. Unions would prefer a closed shop because this arrangement gives the union the ability to decide
whether or not to satisfy the firm's labor demands. The union shop arrangement allows firms the right
to hire anyone, and unions view this as a potential threat to its ability to raise the wage rate.