Which of the following best describes the effects of a major labor union that maintains a union wage above the market equilibrium wage?
A) The quantity of labor demanded exceeds the quantity of labor supplied, and the unemployment rate increases.
B) The quantity of labor demanded exceeds the quantity of labor supplied, and the unemployment rate decreases.
C) The quantity of labor supplied exceeds the quantity of labor demanded, and the unemployment rate increases.
D) The quantity of labor supplied exceeds the quantity of labor demanded, and the unemployment rate decreases.
Correct Answer:
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