The Demand for Unionized Labor Will Generally Be More Elastic

question 36

Multiple Choice

The demand for unionized labor will generally be more elastic, and it will be more difficult for the union to achieve above-equilibrium wages when

• A) there are no close substitutes for the unionized workers.
• B) the domestic producers of the good produced by the unionized workers face weak competition from foreign suppliers of the good.
• C) the cost of employing the unionized workers is a large part of the total cost of the product that they produce.
• D) the demand for the product produced by the unionized workers is highly inelastic.

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Definitions:

Risk Aversion

The tendency to prefer certainty over uncertainty, typically by choosing safer or guaranteed outcomes over riskier ones in decision-making.

Small Business

Any independently owned and operated business that is not dominant in its competitive area and does not employ more than 500 people.