If a union restricts the supply of labour, it ________ the wage rate and ________ the level of employment.

Question

Quizplus · Accepted Answer

When the supply of labour is restricted, there are fewer workers available to work, which creates a situation where the demand for labour exceeds the supply. This can lead to an increase in the wage rate as employers try to attract workers. However, the higher wage rate may also cause employers to hire fewer workers, resulting in a decrease in the level of employment. Therefore, a union that restricts the supply of labour can raise the wage rate but also decrease the level of employment, making option B the correct answer.

If a Union Restricts the Supply of Labour, It ________