Microeconomics
Microeconomics
13th Edition
ISBN: 9781337671590
Author: Arnold
Publisher: Cengage
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Chapter 14, Problem 1QP
To determine

Identify the different behaviors of labor union.

Expert Solution & Answer
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Explanation of Solution

The total wage bill is equal to the wage rate, which is multiplied by the number of labor hours worked. It will be maximized by selecting a wage-quantity combination at the point where the demand for labor is unit elastic. At that point, if the number of total workers is less than the number of union members, then the labor union will allow to cut down the wage rate to get employment to all of its members. Hence, the labor union will behave differently if it needs to get all of its members employed rather than maximizing the total wage bill.

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