If a Union Negotiates a Wage Above the Market Equilibrium

question 68

Multiple Choice

If a union negotiates a wage above the market equilibrium, each firm's

• A)supply of labor is greater than its marginal resource cost
• B)supply of labor is less than its marginal resource cost
• C)supply of labor is equal to its marginal resource cost
• D)demand for labor is less than its marginal resource cost
• E)demand for labor is greater than its marginal resource cost

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Definitions:

Value of Marginal Product

The additional revenue generated by employing one more unit of a factor of production, holding other factors constant.

Demand for Labor

The employers' desire for hire based on the available wages, the skill levels required, and the overall need for labor to perform tasks.

Supply of Labor

The total amount of labor, in terms of hours or the number of workers, that is available for employment in the economy at a given wage rate.

Opportunities

Situations where it's possible to perform an action that could lead to an improvement in one's situation.