A Union Raises the Wage of Firm X from $10

question 7

Multiple Choice

A union raises the wage of firm X from $10 to $15 an hour. In which of these cases is there a direct reduction in the social welfare?

• A) Worker A retains their job at company X, such that company X's profits associated with worker A go down $5 an hour.
• B) Worker B, working for firm Y gets a lower wage due to the spill-over effect.
• C) Worker C, who is getting $7 an hour working for firm Z would have otherwise have gotten a job with firm X at a wage of $8.
• D) Worker D, who is working for firm M, gets a higher wage due to the threat effect.

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Definitions:

Hypocritical

Characterized by behavior or a way of life that contradicts what one claims to believe or feel, often involving pretense or duplicity.

Human Rights

The basic rights and freedoms that belong to every person in the world, from birth until death, based on the principle of respect for the individual.

World War II

A global conflict that lasted from 1939 to 1945, involving most of the world's nations, including all the great powers, eventually forming two opposing military alliances: the Allies and the Axis.

Atlantic Charter

Agreement Issued August 12, 1941, following meetings in Newfoundland between President Franklin D. Roosevelt and British Prime Minister Winston Churchill, that signaled the Allies’ cooperation and stated their war aims.