5. Exclusive, or craft, unions - Reducing labor supplyConsider a small town economy with only two sectors: coal mining and logging. Both sectors are perfectly competitive, and workers are equally ableand willing to work as miners (coal industry) and lumberjacks (logging). Only outside companies demand the coal and wood produced in the city, sochanges in the domestic labor market do not affect the product demand curve in either sector.Suppose a union forms in the logging industry. The union limits its membership to less than the number of workers employed before the union formedand forces all employers in the industry to hire only union workers.Show the effect of unionization in the logging sector on the labor market for miners.Tool tip: Click and drag one or both of the curves. Curves will snap into position, so if you try to move the curve and it snaps back to its originalposition, just try again and drag it a little farther.(?Labor supplyLabor demandLabor supplyLabor demandQUANTITY OF LABORWAGE Now show the effect of unionization in the logging sector on the market for coal.SupplyDemandSupplyDemandQUANITYAs a result of the unionization:The price of wood will increase and the price of coal will decreaseThe price of wood will decrease and the price of coal will increaseThe price of wood will decrease and the price of coal will decreaseThe price of wood will increase and the price of coal will increasePRICE

Unions restrict the number of labor thereby interfere with the free-market allocation of labor.

As a result of the unionization: The price of wood will increase and the price of coal will decrease The price of wood will decrease and the price of coal will increase The price of wood will decrease and the price of coal will decrease The price of wood will increase and the price of coal will increase

As a result of the unionization: The price of wood will increase and the price of coal will decrease The price of wood will decrease and the price of coal will increase The price of wood will decrease and the price of coal will decrease The price of wood will increase and the price of coal will increase

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Unemployment

Section: Chapter Questions

Problem 8PA

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Similar questions

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