Consider the housing construction industry. Assume the industry is perfectly competitive in input and output markets. Suppose that, through collective bargaining, a labor union successfully 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 demand for labor and the supply of labor for the entire industry. On the following graph, use the purple points (diamond symbol) to plot the new industry supply curve. Then use the black point (plus symbol) to show the effect of the union negotiations on the quantity of labor demanded in the industry.

ENGR.ECONOMIC ANALYSIS
14th Edition
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Chapter1: Making Economics Decisions
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Consider the housing construction industry. Assume the industry is perfectly competitive in input and output markets. Suppose that, through collective
bargaining, a labor union successfully 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 demand for labor and the supply of labor for the entire industry.
On the following graph, use the purple points (diamond symbol) to plot the new industry supply curve. Then use the black point (plus symbol) to show
the effect of the union negotiations on the quantity of labor demanded in the industry.
WAGE RATE
18
15
N
12
6
3
0
0
5
10
15
20
QUANTITY OF LABOR
Supply
Demand
25
30
Demand
Supply
++
Quantity Negotiations
♦
New supply of labor
Quantity Advertising
?
Transcribed Image Text:Consider the housing construction industry. Assume the industry is perfectly competitive in input and output markets. Suppose that, through collective bargaining, a labor union successfully 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 demand for labor and the supply of labor for the entire industry. On the following graph, use the purple points (diamond symbol) to plot the new industry supply curve. Then use the black point (plus symbol) to show the effect of the union negotiations on the quantity of labor demanded in the industry. WAGE RATE 18 15 N 12 6 3 0 0 5 10 15 20 QUANTITY OF LABOR Supply Demand 25 30 Demand Supply ++ Quantity Negotiations ♦ New supply of labor Quantity Advertising ?
The number of workers employed
Suppose the union bolsters demand by rolling out a "Buy Union" advertising campaign to mitigate the unemployment caused by the wage increase.
Adjust the graph to show the effect of the advertising campaign on the industry. Then use the gray point (star symbol) to show the effect of the
advertising campaign on the quantity of labor demanded in the industry.
If the union invests in the campaign, the number of workers employed will
Transcribed Image Text:The number of workers employed Suppose the union bolsters demand by rolling out a "Buy Union" advertising campaign to mitigate the unemployment caused by the wage increase. Adjust the graph to show the effect of the advertising campaign on the industry. Then use the gray point (star symbol) to show the effect of the advertising campaign on the quantity of labor demanded in the industry. If the union invests in the campaign, the number of workers employed will
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