Solved

Exhibit 28-2 -Refer to Exhibit 28-2.The Union Wants Management to Believe the Management

Question 18

Multiple Choice

Exhibit 28-2

-Refer to Exhibit 28-2.The union wants management to believe the supply curve of labor is S'S instead of SS.What does supply curve S'S represent?

A) It represents a situation where management cannot hire workers for less than W₂, and if the firm wants to hire more workers than it hires at equilibrium, it will have to pay a wage between W₁ and W₂.
B) It represents a situation where management cannot hire workers for more than W₂, and if the firm wants to hire more workers than Q₂ it will have to pay more than W₁.
C) It represents a situation where management cannot hire workers for less than W₂, and if the firm wants to hire more than Q₃ workers it will have to pay more than W₂.
D) It represents a situation where management cannot hire Q₁ - Q₂workers for less than W₂, but that Q₃ - Q₁ workers can be hired for less.