Chapter 12.3, Problem 3R

To determine

To explain how supply and demand of the wages in the industries can be overruled by collective bargaining.

Explanation of Solution

Collective bargaining: It is the process in which the unions try to negotiate with the employers regarding the conditions of their employment, their benefits, health safety, etc so that their work and family life could have a proper balance.

Collective bargaining when done, takes the wages beyond the supply or according to the demand of the workers in which an increase in the demand of the laborers or a decrease in their supply would increase the demand for the wages too. The unions act as monopolies and try to negotiate with the employers for the hours of work, the leave, job security, etc along with their desired or decided wages which can create a huge burden on the employers.

The process of collective bargaining tends to create stress on the employers as the unions demand for the increased pay and benefits creates a huge burden to tackle for the employers. And if not negotiated or agreed, then the industries face the decrease in productivity and increase in the waste of the resources which can increase the cost of the commodity produced.