FIGURE 14-6
-Refer to Figure 14-6. The market begins in equilibrium with the curves labelled Demand and Supply. If a labour union negotiates the wage to W2, the difference between this wage and the competitive equilibrium wage is called

Question

Quizplus · Accepted Answer

The difference between the negotiated wage (W2) and the competitive equilibrium wage (W1) is called the union wage premium. This is because it represents the additional wage paid to unionized workers compared to non-unionized workers in the same industry.

FIGURE 14-6 -Refer to Figure 14-6. the Market Begins in Equilibrium with Equilibrium