(ECO-U9-Q11) Figure \( 9.20 \) depicts the effect of union wage-setting. What can we conclude from this figure? (A) Compared to A, at C the effort per hour is higher and therefore the firm's profit is higher. (B) The resulting bargained wage-setting curve will be above the wage-setting curve with no union. (C) The effect of a strong union will always be to increase unemployment. (D) Under union wage-setting, the firm is still setting the wage that maximizes its profits.

(ECO-U9-Q11) Figure \( 9.20 \) depicts the effect of union wage-setting. What can we conclude from this figure? (A) Compared to A, at C the effort per hour is higher and therefore the firm's profit is higher. (B) The resulting bargained wage-setting curve will be above the wage-setting curve with no union. (C) The effect of a strong union will always be to increase unemployment. (D) Under union wage-setting, the firm is still setting the wage that maximizes its profits.

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

ChapterST9: Do Labor Unions Increases The Wages Of Workers?

Section: Chapter Questions

Problem 6CQ

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Consider a union that bargains over Wages (W) and employment (E). 1. Draw a diagram that illustrates the set of efficient contracts. Be sure your diagram also includes: at least 2 firm isoprofit curves; at least 2 union indifference curves; the labour demand curve 2. Now describe the location of the contract curve relative to the labour demand curve and the isoprofit curves and explain the intuition behind this location on the graph
What is the principle strategy of an inclusive (industrial) union in order to increase the wages of its members?
(a) Would you expect unionization to cause wages to increase, decrease, or remain the same relative to a non-unionized labor equilibrium? (b) Would you expect unionization to cause the quantity of labor employed to increase, decrease, or remain the same relative to a non-unionized labor equilibrium? (c) Offer two ways that unions can increase worker productivity.
Discuss how both unions and firms can be better off if they move off the demand curve. Derive the contract curve.
Describe how we calculate the percentage decline in national income resulting from the misallocation of labor in a model of monopoly unionism. What is the dollar value of this allocative inefficiency if unions and firms reach efficient contracts and the contract curve is vertical?
List and explain five reasons why the role of unions are becoming more important now than prior to the COVID-19 pandemic
6. Under certain circumstances, it is possible for unions to better their interests by affecting or altering the union constraint in a direct or indirect manner. Could you recommend a strategy that may work for this goal, based on your microeconomics knowledge? How can unions put your strategy to work? Demonstrate the effect of your strategy in a diagram.
3. UConn wants to employ some new cleaning staff. UConn's labor demand curve is given 0.01E. Suppose cleaning staff in Storrs operate under a monopoly by w = 20 - union. Suppose the utility function for the union is U = wzEz. This means that MUE= 1 E2 2wz W2 1 282 and MUw . What wage will the union demand?
Contrast the methods used by inclusive unions and exclusive unions to raise union wage rates.
Question One Answer the following questions in words and diagrams: a) Discuss and illustrate union's objectives, constraint, and optimization. b) Explain the relationship between firm's labour demand curve and iso-profit curves. c) Derive and illustrate a bargaining range between union and firm. d) Define Pareto-efficiency and use it to derive contract curve.