Unions may lower real wages in the nonunion sector because
A. Union firms can easily hire nonunion workers for a lower wage.
B. Workers who are displaced by higher wages in the unionized sector increase the labor supply in the nonunion sector.
C. Nonunion firms adjust wages to avoid the threat of unionization.
D. Nonunion firms have difficulty attracting skilled workers away from the unions.
Answer: B
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Suppose that a price-discriminating monopolist divides its market into two segments. In each market segment, price is determined by finding the level of output where that market's
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