Suppose there is a competitive market for retail workers at a large shopping mall that is large enough to constitute its own labour market.The labour demand curve is QD = 1000 - 20(w).The labour supply curve is QS = 400 + 40(w).Suppose that a union now successfully organizes the workers at this mall and obtains a wage rate of $11 (but does not affect the demand curve).The number of unemployed workers in this mall labour market becomes

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The correct answer is A.The equilibrium wage rate in the competitive market is $10. At this wage rate, the quantity of labour demanded is 800 and the quantity of labour supplied is 800. When the union obtains a wage rate of $11, the quantity of labour demanded falls to 600 and the quantity of labour supplied rises to 1000. This creates a surplus of labour of 400 workers, which is the number of unemployed workers in this mall labour market.

Suppose There Is a Competitive Market for Retail Workers at a Large