If Clerical Workers in Your State Voted to Have a Union

question 133

Essay

If clerical workers in your state voted to have a union represent them in negotiations with employers, they would have monopoly power in wage determination. Employers would be in no position to exert monopsony power in their employment of clerks in this market due to the large number of employers in the market. Labor supply is given by
L_S = 50W - 100
(or, equivalently W = L_S/50 + 2)
Labor demand is given by
L_D = 700 - 25W
(or, equivalently W = -L_D/25 + 28)
a. What is the equation for marginal revenue?
b. Using the supply and demand equations, compute the wage rate and number of workers that would be hired when there is no union representation.
c. Using the supply and demand equations, compute the wage rate and number of workers hired when the union represents workers and acts to maximize aggregate wages to all workers hired.
d. Explain the impact of (c) on the competitive market.

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Definitions:

Required Rate of Return

The minimum annual return percentage necessary to attract individual or corporate investment into a specific security or project is known as the required rate of return.

Constant Growth Rate

The assumption that a variable, such as a company’s dividends or economy, will grow at a consistent rate over time.

Expected Dividend

The forecasted payment of dividends to shareholders, based on a company’s past dividend history and future earnings projections.

Semistrong Efficient

This term refers to a form of market efficiency that assumes all publicly available information is already reflected in stock prices, including historical and fundamental data.