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Exhibit 27-2

Question 22

Multiple Choice

Exhibit 27-2

-Refer to Exhibit 27-2. 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 - Q₂ workers for less than W₂, but that Q₃ - Q₁ workers can be hired for less.