If a union restricts the supply of labor but cannot change the demand for labor, the union ________ the wage rate and ________ the level of employment.

Question

Quizplus · Accepted Answer

When a union restricts the supply of labor, it reduces the number of workers available, which typically leads to an increase in the wage rate due to the scarcity of labor. However, with a higher wage rate and unchanged demand, employers may hire fewer workers, leading to a decrease in the level of employment.

If a Union Restricts the Supply of Labor but Cannot