In Some Markets Plumbers Have a Choice of Joining Unions

question 98

Essay

In some markets plumbers have a choice of joining unions or working as nonunion plumbers. The total short-run supply of plumbers is perfectly inelastic at 500 workers per day. The demands for nonunionized and unionized plumbers, respectively, are:
W_NU = 30 - 0.04L W_U = 30 - 0.10L.
The wage rate is W in $/hr. and the number of workers per day is L.
a. Determine the total demand for plumbers.
b. Calculate the total market wage rate of plumbers assuming that unionized and nonunionized plumbers get the same wage rate.
c. If the unionized workers succeeded in getting their wage increased to $20.00 per hour, how many unionized workers would lose their jobs?
d. If the unionized workers in (c) who lost their jobs take jobs as non-unionized workers, how much and in what direction would non-unionized wages change?

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Definitions:

Spreadsheet

A digital tool or program that allows users to organize, calculate, and analyze data across a grid of rows and columns.

Job-Order Costing

An accounting system used to ascertain costs for each job or project separately, often used in manufacturing or service industries where each job is different.

Manufacturing Overhead

All indirect costs associated with the production process, including equipment maintenance, factory rent, and utilities.

Cost of Goods Sold

Costs incurred directly from the creation of a company's sold products, encompassing both the price of materials and the wages for labor.