If the sellers of labor in a competitive market decided to unionize,ceteris paribus,then wages would
A)Rise and employment would fall.
B)Fall and employment would fall.
C)Rise and employment would rise.
D)Fall and employment would rise.

Question

Quizplus · Accepted Answer

When sellers of labor unionize, they gain bargaining power and can negotiate higher wages and better working conditions. However, this comes at a cost of reducing the demand for labor, as the higher wages make it more expensive for firms to hire workers. Therefore, ceteris paribus, wages would rise, but employment would fall as the demand for labor decreases. This is a result of the union's ability to negotiate higher wages, which in turn reduces the demand for labor.

If the Sellers of Labor in a Competitive Market Decided