If, beginning from a competitive labor market, some workers form a union and negotiate a higher rate for themselves, which of the following is likely to happen?
a. Competition will force the wage rate in the non-union sector to increase to the level of the union wage.
b. The marginal product of labor curve will increase in the unionized sector
c. Employment will move from the union to the non-union sector over time.
d. Employment will increase in the union sector because workers will be attracted by the higher union wage.
c
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Suppose the price of good x in country A is lower than the price of good x in country B when no trade is permitted. In the absence of transportation costs, if the supply curve for good x in the two countries is sufficiently elastic, free trade in good x implies that country B will stop producing x.
Answer the following statement true (T) or false (F)
An economics professor has devised an interesting game to test the understanding of his students. He randomly selects two students from his class and gives a $50 bill to one of them
He then asks him what percentage of $50 he would give to his classmate. The first student can choose any percentage he wishes, while the second student can choose whether or not to accept the offer. If the second student does not accept the offer, the professor will take the bill back but if he accepts the offer, the money will be divided in the ratio decided by the first student. a) What is the likely outcome of this game if both the students value more money to less? b) What is the likely outcome of this game if the second student values fairness?
Which of the following could lead to an increase in the equilibrium quantity of a good?
a. a decrease in supply and a decrease in demand b. an increase in the price of an input c. an increase in demand and an increase in supply d. a decrease in demand regardless of supply e. a decrease in technology
If government expenditures exceed tax receipts then, other things being constant
A. a surplus exists. B. a balanced budget exists. C. the public debt will rise. D. the deficit becomes smaller.