Suppose a Powerful Labor Union Negotiates a Wage for Its

question 17

Multiple Choice

Suppose a powerful labor union negotiates a wage for its members above the equilibrium wage rate in a nonunionized market. A likely result of this is that

• A) the union will have difficulty recruiting new members.
• B) union members will be able to work more overtime than before.
• C) this firm will make up for the higher wage rate by expanding output.
• D) not everyone who wants to work at the new wage will be able to find jobs.

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Definitions:

AMT Depreciation

Depreciation methods for the Alternative Minimum Tax purposes, which can differ from regular tax depreciation methods, often resulting in a slower expense recognition for AMT calculations.

Straight-line Method

A method of calculating depreciation and amortization by evenly spreading the cost over the useful life of an asset.

Personal Property

Tangible items and assets (excluding real estate) owned by an individual or business, such as vehicles, jewelry, and equipment.

Standard Deduction

A set amount deducted from taxable income that reduces the amount of income subject to tax, available to all taxpayers who do not itemize deductions.