Answered: Given: Consider two states that adopt…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Question

Given: Consider two states that adopt different laws concerning labor unions. The following graph shows the labor market in a state in the North. Initially, the market-clearing wage there is $8.00 per hour.

Suppose that the legislature in this northern state passes laws that make it easy for workers to join a union. Through collective bargaining, the union negotiates a wage of $10.00 per hour.

At the union wage__________union workers will be employed.

The following graph shows the labor market in a state in the South. The legislature in this state passes strong "right-to-work" laws that make it very difficult for unions to organize workers, so the wage is always equal to the market-clearing value. Except for this difference in legislation, the two states are very similar.
The initial position of the graph corresponds to the initial labor market condition in the southern state before the labor union negotiated the new, higher wage for workers in the northern state.
Suppose that after the wage goes up in the northern state, some workers in the northern state lose their jobs and decide to move to the southern state.

Part 2

Which of the following groups are better off as a result of the union action in the northern state? Check all that apply.

A) Workers who find new jobs in the southern state

B) Employers in the northern state

C) Workers in the northern state-employed at the union wage

D) All workers in the northern state

Adjust the graph to show what happens to employment and wages in the southern state.
Supply
Demand
Supply
Demand
LABOR
Which of the following groups are better off as a result of the union action in the northern state? Check all that apply.
Workers who find new jobs in the southern state
Employers in the northern state
Workers in the northern state employed at the union wage
All workers in the northern state
WAGE

Graph Input Tool
Market for Labor
16
I Wage
(Dollars per hour)
14
Supply
10.00
Labor Demanded
(Thousands of
workers)
Labor Supplied
(Thousands of
workers)
12
600
1,000
10
8
Demand
200
400
600
800 1000 1200 1400 1600
LABOR (Thousands of workers)
Graph Input Tool
Market for Labor
16
I Wage
(Dollars per hour)
14
Supply
8.00
Labor Demanded
(Thousands of
workers)
Labor Supplied
(Thousands of
workers)
12
800
800
10
8
Demand
200
400
600
800 1000 1200 1400
1600
LABOR (Thousands of workers)
WAGE (Dollars per hour)
WAGE (Dollars per hour)

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