If a union restricts the supply of labour but cannot change the demand for labour, the union _______
The wage rate and _______ the level of employment.
A) raises; decreases
B) lowers; increases
C) raises; increases
D) lowers; decreases

Question

If a union restricts the supply of labour but cannot change the demand for labour, the union _______ 
The wage rate and _______ the level of employment.
A) raises; decreases
B) lowers; increases
C) raises; increases
D) lowers; decreases

Quizplus · Accepted Answer

When a union restricts the supply of labor but cannot change the demand for labor, it typically raises the wage rate because the reduced supply of labor increases the price employers must pay. However, at the higher wage rate, employers will demand less labor, leading to a decrease in the level of employment.

If a Union Restricts the Supply of Labour but Cannot