Unions Might Increase Efficiency in the Case Where They

question 54

Multiple Choice

Unions might increase efficiency in the case where they

• A) Raise the wage for insiders above the competitive equilibrium.
• B) Lower the wage of local outsiders.
• C) Offset the market power of a large firm that is the dominant employer in a region.
• D) Threaten a strike but don't actually follow through so there are no lost hours of work.

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Definitions:

Specialization

The process of focusing on and becoming expert in a particular subject or skill.

Production

The process of creating goods and services by combining labor, land, and capital to generate output.

Comparative Advantage

A person's, corporation's, or country's capability to manufacture a good or provide a service with a smaller opportunity cost than that of its competitors.

Absolute Advantage

The ability of a party to produce a greater quantity of a good, product, or service than competitors, using the same amount of resources.