4. Inclusive, or industrial, unions - Negotiating a higher industry wageConsider the housing construction industry. Assume that the industry is perfectly competitive in both input and output markets. Suppose that, throughcollective bargaining, a labor union negotiates an industry-wide wage for various kinds of labor (electricians, plumbers, and so on). In particular, itsucceeds in negotiating a wage increase for carpenters from $15 to $20 per hour.The following graph shows the labor demand of an individual firm.On the following graph, show what happens at the firm level as a result of the union negotiations.(?3025DemandSupplySupply1510Demand5122436486072QUANTITY OF LABORWAGE RATE20 Now consider the effects of the wage change on the entire industry.Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.Graph Input Tool?)30I Wage Rate(Dollars per hour)1525SupplyQuantityDemanded(Thousands ofworkers)Quantity Supplied(Thousands ofworkers)363620Excess Supply(Thousands ofworkers)Shortage(Thousands ofworkers)1510DemandDemand ShifterPro-unionAdvertising(Millions of dollars)122436486072QUANTITY OF LABOR (Thousands of workers)The union's wage increase from $15 to $20 per hour causes an excess supply ofworkers. (Note: Be sure to enter your answer inthousands of workers.)Suppose that the union, in order to mitigate the unemployment caused by the wage increase, bolsters demand by rolling out a "Buy Union"advertising campaign. If the union spends $5 million on the campaign, the excess supply of labor will beworkers. (Note: Be sure toenter your answer in thousands of workers.)WAGE RATE (Dollars per hour)

Answer: (1). The following graph shows the impact of wage increase from $15 to $20 per hour on the…

4. Inclusive, or industrial, unions - Negotiating a higher industry wage Consider the housing construction industry. Assume that the industry is perfectly competitive in both input and output markets. Suppose that, through collective bargaining, a labor union negotiates an industry-wide wage for various kinds of labor (electricians, plumbers, and so on). In particular, it succeeds in negotiating a wage increase for carpenters from $15 to $20 per hour. The following graph shows the labor demand of an individual firm. On the following graph, show what happens at the firm level as a result of the union negotiations. (? 30 25 Demand 20 Supply Supply 10 Demand 12 24 36 48 60 72 QUANTITY OF LABOR WAGE RATE

4. Inclusive, or industrial, unions - Negotiating a higher industry wage Consider the housing construction industry. Assume that the industry is perfectly competitive in both input and output markets. Suppose that, through collective bargaining, a labor union negotiates an industry-wide wage for various kinds of labor (electricians, plumbers, and so on). In particular, it succeeds in negotiating a wage increase for carpenters from $15 to $20 per hour. The following graph shows the labor demand of an individual firm. On the following graph, show what happens at the firm level as a result of the union negotiations. (? 30 25 Demand 20 Supply Supply 10 Demand 12 24 36 48 60 72 QUANTITY OF LABOR WAGE RATE

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter14: Labor Markets And Income

Section: Chapter Questions

Problem 1SCQ: Table 14.10 shows levels of employment (Labor), the marginal product at each of those levels, and...

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Table 14.10 shows levels of employment (Labor), the marginal product at each of those levels, and the price at which the film can sell output in the perfectly competitive market where it operates. What is the value of the marginal product at each level of labor? If the firm operates in a perfectly competitive labor market where the going market wage is 12, what is the films profit maximizing level of employment?