When Outsiders Have a Greater Role Than Do Insiders in the Wage-Bargaining

question 40

Multiple Choice

When outsiders have a greater role than do insiders in the wage-bargaining process, the negotiated wage is likely to be ______ the equilibrium wage.

• A) much greater than
• B) much less than
• C) much closer to
• D) about twice

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Definitions:

Marginal Social Cost

The cost to society of producing an additional unit of a good or service, including both the private costs and any external costs.

Marginal Social Benefits

The extra advantage to the entire community from using an additional unit of a product or service.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning their use by one individual does not reduce availability to others.

Marginal Social Cost

The total cost to society of producing an additional unit of a good or service, taking into account both private costs and any externalities.