If a union negotiates a wage above the market equilibrium, each firm hiring union members faces

Question

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When a union negotiates a wage above the market equilibrium, it creates a situation where the wage rate is higher than what would be paid in a competitive market. As a result, firms hiring union members face a perfectly elastic supply curve for labor, meaning that they can hire as much labor as they want at the union-negotiated wage rate. This is because union workers are willing to supply as much labor as the firm demands at the higher wage rate, while non-union workers are willing to work for lower wages outside of the unionized sector. Thus, firms cannot affect the wage rate by increasing or decreasing their demand for labor, and the supply curve remains infinitely elastic.

If a Union Negotiates a Wage Above the Market Equilibrium