When a Union Raises the Wage Above the Equilibrium Level

question 433

Multiple Choice

When a union raises the wage above the equilibrium level,

• A)the quantity of labor supplied and unemployment both rise.
• B)the quantity of labor supplied and unemployment both fall.
• C)the quantity of labor supplied rises and unemployment falls.
• D)the quantity of labor supplied falls and unemployment rises.

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Definitions:

Marginal Revenue

The extra revenue gained by selling an additional unit of a product or service.

Economies of Scale

Cost advantages that entities attain due to the scale of operation, with costs per unit of output generally decreasing with increasing scale.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, measuring the performance exceeding opportunity costs.