Given that unions face a downward-sloping demand curve for labor,which of the following is not true concerning the optimal union wage rate at a given employment level?
A)It exceeds the competitive wage.
B)It is above the labor supply curve.
C)It is above the marginal wage.
D)It is above the labor demand curve.

Question

Quizplus · Accepted Answer

The optimal union wage rate at a given employment level is set above the competitive wage and the labor supply curve to secure higher wages for its members, but it does not exceed the labor demand curve. If the union wage were above the labor demand curve, employers would hire fewer workers than the union intends, leading to unemployment among the union members. The marginal wage is essentially the additional cost of hiring an extra worker, and the union's optimal wage aims to be above this to ensure higher wages for its members.

Given That Unions Face a Downward-Sloping Demand Curve for Labor,which