If a union is able to bargain for a wage that is higher than the equilibrium:
A) all workers will earn a wage equal to their value of marginal product.
B) some excess supply of labor or unemployment will result.
C) compensating differentials will be erased.
D) diminishing returns will not exist.

Question

Quizplus · Accepted Answer

When a union bargains for a wage higher than the equilibrium, it results in a surplus of labor, meaning more workers are willing to work at that wage than there are jobs available, leading to unemployment.

If a Union Is Able to Bargain for a Wage