MICROECONOMICS >IA<
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ISBN: 9781260511055
Author: McConnell
Publisher: MCG
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Chapter 17.A, Problem 4ADQ
To determine
The estimated size of union wage advantage.
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Suppose the demand curve for union labor is given by the equation: L = 450 − 3W.Suppose the current wage is $20. Now suppose the union is successful in raising the wage of its members to $28. At the same time, it is able to shift the demand for labor out to: L = 510 − 3W.
Has the higher wage negotiated by the union reduced the employment opportunities of its members? If so, by how much?
c. Who has benefitted and who has lost as a result of this negotiation. Be specific and complete.
Suppose the demand curve for union labor is given by the equation: L = 450 − 3W.Suppose the current wage is $20. Now suppose the union is successful in raising the wage of its members to $28. At the same time, it is able to shift the demand for labor out to: L = 510 − 3W.
a. What was the original employment level? What is the new employment level?
b. Has the higher wage negotiated by the union reduced the employment opportunities of its members? If so, by how much?
c. Who has benefitted and who has lost as a result of this negotiation. Be specific and complete.
4 Suppose that a union and a firm operate in an efficient bargaining framework, with equal bargaining powers (so the term for bargaining power in the Nash product equals one). The union is assumed to have a utility function, specified net of its threat point, of the form U = (w − )L. The firm gains satisfaction from profits according to the utility function U(π) = π with the threat point, , equal to zero. (a) Derive the equation for the contract curve. (b) Show that the level of employment is determined independently of the equilibrium value of wages. (c) Show that changes in the degree of bargaining power affect wages but not employment.
Chapter 17 Solutions
MICROECONOMICS >IA<
Ch. 17.3 - Prob. 1QQCh. 17.3 - Prob. 2QQCh. 17.3 - Prob. 3QQCh. 17.3 - Prob. 4QQCh. 17.A - Prob. 1ADQCh. 17.A - Prob. 2ADQCh. 17.A - Prob. 3ADQCh. 17.A - Prob. 4ADQCh. 17.A - Prob. 1ARQCh. 17.A - Prob. 2ARQ
Ch. 17.A - Prob. 3ARQCh. 17.A - Prob. 4ARQCh. 17.A - Prob. 1APCh. 17.A - Prob. 2APCh. 17 - Prob. 1DQCh. 17 - Prob. 2DQCh. 17 - Prob. 3DQCh. 17 - Prob. 4DQCh. 17 - Prob. 5DQCh. 17 - Prob. 6DQCh. 17 - Prob. 7DQCh. 17 - Prob. 8DQCh. 17 - Prob. 9DQCh. 17 - Prob. 10DQCh. 17 - Prob. 1RQCh. 17 - Prob. 2RQCh. 17 - Prob. 3RQCh. 17 - Prob. 4RQCh. 17 - Prob. 5RQCh. 17 - Prob. 6RQCh. 17 - Prob. 7RQCh. 17 - Prob. 1PCh. 17 - Prob. 2PCh. 17 - Prob. 3PCh. 17 - Prob. 4PCh. 17 - Prob. 5P
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