Suppose that wages paid to both factory workers and construction workers in a perfectly competitive factor market is $15 per hour.If the market for factory workers becomes unionized, you would expect:

Question

Quizplus · Accepted Answer

When the market for factory workers becomes unionized, the union can negotiate with the employers for higher wages and better working conditions. This will result in an increase in the wage rate for factory workers. However, this increase in wage rate for factory workers may not affect the wage rate for construction workers as they are in a different sector and may not be affected by the unionization of the factory workers' market. Therefore, choices A, C, and D can be ruled out.

Suppose That Wages Paid to Both Factory Workers and Construction