Consider a tropical island economy with only two sectors: souvenir manufacturing and hospitality (hotels). Both sectors are perfectly competitive, and workers are equally able and willing to work in either industry. Only foreign tourists demand souvenirs and hotel stays, so changes in the domestic labor market do not affect the product demand curve in either sector. Suppose a union forms in the souvenir manufacturing industry. The union limits its membership to less than the number of workers employed before the union formed and forces all employers in the industry to hire only union workers. Show the effect of unionization in the souvenir industry on the labor market for souvenir manufacturers.
Consider a tropical island economy with only two sectors: souvenir manufacturing and hospitality (hotels). Both sectors are perfectly competitive, and workers are equally able and willing to work in either industry. Only foreign tourists demand souvenirs and hotel stays, so changes in the domestic labor market do not affect the product demand curve in either sector. Suppose a union forms in the souvenir manufacturing industry. The union limits its membership to less than the number of workers employed before the union formed and forces all employers in the industry to hire only union workers. Show the effect of unionization in the souvenir industry on the labor market for souvenir manufacturers.
Chapter16: The Markets For Labor, Capital, And Land
Section: Chapter Questions
Problem 13P
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Question
![Consider a tropical island economy with only two sectors: souvenir manufacturing and hospitality (hotels). Both
sectors are perfectly competitive, and workers are equally able and willing to work in either industry. Only foreign
tourists demand souvenirs and hotel stays, so changes in the domestic labor market do not affect the product
demand curve in either sector.
Suppose a union forms in the souvenir manufacturing industry. The union limits its membership to less than the
number of workers employed before the union formed and forces all employers in the industry to hire only union
workers.
Show the effect of unionization in the souvenir industry on the labor market for souvenir manufacturers.
Tool tip: Click and drag one or both of the curves. Curves will snap into position, so if you try to move the curve and
it snaps back to its original position, just try again and drag it a little farther.
WAGE RATE (Dollars per hour]
12+
10
8
6
2
0
10
20
30
Labor Supply
Labor Demand
40 50 60
QUANTITY OF LABOR
(Souvenir manufacturers]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fba261385-97f5-40c0-ae57-7fa3ebd6691b%2F394559ec-fb37-421e-b4dc-1ba691c11f58%2Fj122ot_processed.png&w=3840&q=75)
Transcribed Image Text:Consider a tropical island economy with only two sectors: souvenir manufacturing and hospitality (hotels). Both
sectors are perfectly competitive, and workers are equally able and willing to work in either industry. Only foreign
tourists demand souvenirs and hotel stays, so changes in the domestic labor market do not affect the product
demand curve in either sector.
Suppose a union forms in the souvenir manufacturing industry. The union limits its membership to less than the
number of workers employed before the union formed and forces all employers in the industry to hire only union
workers.
Show the effect of unionization in the souvenir industry on the labor market for souvenir manufacturers.
Tool tip: Click and drag one or both of the curves. Curves will snap into position, so if you try to move the curve and
it snaps back to its original position, just try again and drag it a little farther.
WAGE RATE (Dollars per hour]
12+
10
8
6
2
0
10
20
30
Labor Supply
Labor Demand
40 50 60
QUANTITY OF LABOR
(Souvenir manufacturers]
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