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2. Excess supply with union wages Consider the housing construction industry. Assume that the industry is perfectly competitive in both input and output markets. Suppose that, through collective bargaining, a labor union negotiates an industry-wide wage for various kinds of labor (electricians, plumbers, and so on). In particular, it succeeds in negotiating a wage increase for carpenters from $9 to $12 per hour. The following graph shows the labor demand of an individual firm. On the following graph, show what happens at the firm level as a result of the union negotiations. 3 0 12 18 Demand Supply 20 25 30 QUANTITY OF LABOR Now consider the effects of the wage change on the entire industry. | Demand -- Supply Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. ° 18 Graph Input Tool Wage Rate 9 Supply (Dollars per hour) 15 Quantity 15 Demanded (Thousands of Quantity Supplied (Thousands of workers) 15 12 workers) Excess Supply (Thousands of workers) Shortage (Thousands of workers) 0 Demand Demand Shifter Pro-union Advertising (Millions of dollars) ° 10 15 20 25 30 QUANTITY OF LABOR (Thousands of workers) The union's wage increase from $9 to $12 per hour causes an excess supply of thousands of workers.) workers. (Note: Be sure to enter your answer in Suppose that the union, in order to mitigate the unemployment caused by the wage increase, bolsters demand by rolling out a "Buy Union" advertising campaign. If the union spends $3 million on the campaign, the excess supply of labor will be answer in thousands of workers.) workers. (Note: Be sure to enter your

2. Excess supply with union wages Consider the housing construction industry. Assume that the industry is perfectly competitive in both input and output markets. Suppose that, through collective bargaining, a labor union negotiates an industry-wide wage for various kinds of labor (electricians, plumbers, and so on). In particular, it succeeds in negotiating a wage increase for carpenters from $9 to $12 per hour. The following graph shows the labor demand of an individual firm. On the following graph, show what happens at the firm level as a result of the union negotiations. 3 0 12 18 Demand Supply 20 25 30 QUANTITY OF LABOR Now consider the effects of the wage change on the entire industry. | Demand -- Supply Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. ° 18 Graph Input Tool Wage Rate 9 Supply (Dollars per hour) 15 Quantity 15 Demanded (Thousands of Quantity Supplied (Thousands of workers) 15 12 workers) Excess Supply (Thousands of workers) Shortage (Thousands of workers) 0 Demand Demand Shifter Pro-union Advertising (Millions of dollars) ° 10 15 20 25 30 QUANTITY OF LABOR (Thousands of workers) The union's wage increase from $9 to $12 per hour causes an excess supply of thousands of workers.) workers. (Note: Be sure to enter your answer in Suppose that the union, in order to mitigate the unemployment caused by the wage increase, bolsters demand by rolling out a "Buy Union" advertising campaign. If the union spends $3 million on the campaign, the excess supply of labor will be answer in thousands of workers.) workers. (Note: Be sure to enter your

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter14: Labor Markets And Income
Section: Chapter Questions
Problem 12RQ: What determines the demand for labor for a firm operation in a perfectly competitive out market?
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2. Excess supply with union wages Consider the housing construction industry. Assume that the industry is perfectly competitive in both input and output markets. Suppose that, through collective bargaining, a labor union negotiates an industry-wide wage for various kinds of labor (electricians, plumbers, and so on). In particular, it succeeds in negotiating a wage increase for carpenters from $9 to $12 per hour. The following graph shows the labor demand of an individual firm. On the following graph, show what happens at the firm level as a result of the union negotiations. 3 0 12 18 Demand Supply 20 25 30 QUANTITY OF LABOR Now consider the effects of the wage change on the entire industry. | Demand -- Supply Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. ° 18 Graph Input Tool Wage Rate 9 Supply (Dollars per hour) 15 Quantity 15 Demanded (Thousands of Quantity Supplied (Thousands of workers) 15 12 workers) Excess Supply (Thousands of workers) Shortage (Thousands of workers) 0 Demand Demand Shifter Pro-union Advertising (Millions of dollars) ° 10 15 20 25 30 QUANTITY OF LABOR (Thousands of workers) The union's wage increase from $9 to $12 per hour causes an excess supply of thousands of workers.) workers. (Note: Be sure to enter your answer in Suppose that the union, in order to mitigate the unemployment caused by the wage increase, bolsters demand by rolling out a "Buy Union" advertising campaign. If the union spends $3 million on the campaign, the excess supply of labor will be answer in thousands of workers.) workers. (Note: Be sure to enter your
Transcribed Image Text:2. Excess supply with union wages Consider the housing construction industry. Assume that the industry is perfectly competitive in both input and output markets. Suppose that, through collective bargaining, a labor union negotiates an industry-wide wage for various kinds of labor (electricians, plumbers, and so on). In particular, it succeeds in negotiating a wage increase for carpenters from $9 to $12 per hour. The following graph shows the labor demand of an individual firm. On the following graph, show what happens at the firm level as a result of the union negotiations. 3 0 12 18 Demand Supply 20 25 30 QUANTITY OF LABOR Now consider the effects of the wage change on the entire industry. | Demand -- Supply Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. ° 18 Graph Input Tool Wage Rate 9 Supply (Dollars per hour) 15 Quantity 15 Demanded (Thousands of Quantity Supplied (Thousands of workers) 15 12 workers) Excess Supply (Thousands of workers) Shortage (Thousands of workers) 0 Demand Demand Shifter Pro-union Advertising (Millions of dollars) ° 10 15 20 25 30 QUANTITY OF LABOR (Thousands of workers) The union's wage increase from $9 to $12 per hour causes an excess supply of thousands of workers.) workers. (Note: Be sure to enter your answer in Suppose that the union, in order to mitigate the unemployment caused by the wage increase, bolsters demand by rolling out a "Buy Union" advertising campaign. If the union spends $3 million on the campaign, the excess supply of labor will be answer in thousands of workers.) workers. (Note: Be sure to enter your
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