Figure 19-3
The manufacturing labor market.
-Refer to Figure 19-3. Suppose the manufacturing labor market, which is non-unionized, is in equilibrium at a wage equal to $20. Suppose now that the AFL-CIO (a labor organization) organizes the workers in the manufacturing market and negotiates a wage of $30 per hour. After the workers become unionized, how many workers do manufacturing firms collectively hire?

Question

Figure 19-3
The manufacturing labor market. 
-Refer to Figure 19-3. Suppose the manufacturing labor market, which is non-unionized, is in equilibrium at a wage equal to $20. Suppose now that the AFL-CIO (a labor organization) organizes the workers in the manufacturing market and negotiates a wage of $30 per hour. After the workers become unionized, how many workers do manufacturing firms collectively hire?

Quizplus · Accepted Answer

The correct answer is A because after the workers become unionized, the wage increases from $20 to $30 per hour. This makes the labor market more expensive for firms, so they will hire fewer workers. The equilibrium quantity of labor will decrease from 200 workers to 160 workers.

Figure 19-3 The Manufacturing Labor Market