Answer the following questions based on the below diagram, in which EC is theemployer concession curve and UR is the union resistance curve.ECw*URT*Expected strike lengthWage i)If both the union and the firm know the shape and position of the other'sconcession curve, thena. a strike of length T* will occurb. the parties will agree on a wage of W*c. both a. and b. are correctd. neither a. nor b. are correctii)The UR curve will shift up if the expected costs of a strike to the:a. union are reducedb. union are increasedc. firm are reducedd. firm are increasediii)The model assumes that, as the expected length of a strike increases:a. union wage demands fall and firm wage concessions increaseb. union wage demands increase and firm wage concessions decreasec. uncertainty about the union's resistance and the employer's concessionsincreasesd. uncertainty about the union's resistance and the employer's concessionsdecreases

In the diagram above, it is given that : EC curve is the employers concession curve which is an…

Answered: Answer the following questions based on…

Answer the following questions based on the below diagram, in which EC is the employer concession curve and UR is the union resistance curve. EC w* UR T* Expected strike length Wage

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

i)
If both the union and the firm know the shape and position of the other's
concession curve, then
a. a strike of length T* will occur
b. the parties will agree on a wage of W*
c. both a. and b. are correct
d. neither a. nor b. are correct
ii)
The UR curve will shift up if the expected costs of a strike to the:
a. union are reduced
b. union are increased
c. firm are reduced
d. firm are increased
iii)
The model assumes that, as the expected length of a strike increases:
a. union wage demands fall and firm wage concessions increase
b. union wage demands increase and firm wage concessions decrease
c. uncertainty about the union's resistance and the employer's concessions
increases
d. uncertainty about the union's resistance and the employer's concessions
decreases

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