If, Through Collective Bargaining, a Union Is Able to Raise

question 58

Multiple Choice

If, through collective bargaining, a union is able to raise the wage above the existing competitive equilibrium wage,

• A)fewer workers will be employed than before the wage increase.
• B)more workers will be employed than before the wage increase.
• C)the same number of workers will be employed as before the wage increase.
• D)the number of workers that will be employed is not related to the wage increase.

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Definitions:

Market Price

The current price at which a commodity, security, or service can be bought or sold in a particular market.

Willingness to Pay

The maximum amount an individual is prepared to spend for a particular good or service.

Consumer Surplus

The gap between the aggregate amount that buyers are willing and able to allocate for a good or service and the total sum they really pay.

Consumer Surplus

The variance between consumers' potential payment for a good or service and their actual expenditure.