The Union Representing the Bread Makers at the Hostess Bread

question 379

Multiple Choice

The union representing the bread makers at the Hostess Bread Company went on strike and demanded higher wages than what the firm wanted to pay. I. If the firm is in a competitive labor market the union can only raise wages by decreasing employment.
II) If the firm is a monopsony in the labor market the union can only raise wages by decreasing employment.
III) If the firm is a monopsony in the labor market the union can both raise wages and increase employment.

• A) I only
• B) II only
• C) I and II
• D) I and III

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Definitions:

Monopolist

A market participant that has exclusive control over the supply of a particular commodity or service, allowing it to influence price and market conditions.

Profit Maximizing

The process or strategy of adjusting production and operational variables to achieve the highest possible profit.

Same Price

A condition where various sellers offer a product or service at an identical cost to consumers.

Output Decrease

A reduction in the quantity of goods or services produced by a firm, sector, or economy.