An Increase in the Percentage of the Labor Force That

question 160

Multiple Choice

An increase in the percentage of the labor force that is unionized will cause average wages for all workers to rise because

• A) union labor is more productive.
• B) profit levels are lowered to increase wages.
• C) strike threats promote wage increases.
• D) This is a trick question because greater unionization does not imply higher average wages.

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Definitions:

Product-Variety Externality

An economic effect where an individual's consumption choices can lead to an increase in the variety of products available, potentially benefiting other consumers.

Negative Externality

A cost that affects a party who did not choose to incur that cost, often associated with production or consumption activities.

Monopolistically Competitive

A market structure characterized by many firms selling products that are similar but not identical, allowing for some degree of market power and differentiated competition.

Long-Run Equilibrium

A state in which all factors of production and costs are variable, allowing firms to make adjustments so that supply equals demand, leading to no economic profit in perfect competition.