Look at the above figure. A union wishes to maximize wage income for employed union members, so it should aim for a wage rate ________ and a number of employed members equal to ________.

Question

Quizplus · Accepted Answer

The union should aim for a wage rate of W2 and a number of employed members equal to Q2, as this is the point where the marginal revenue product of labor (MRPL) and the wage rate are equal. At this point, the union can maximize the wage income for its members while still ensuring that firms will continue to hire a sufficient number of workers. At any other point, either the wage rate would be too high and result in reduced employment or the wage rate would be too low, resulting in lower wage income for union members.

Look at the Above Figure