Suppose the goal of a union is to maximize the total income of all workers it represents.In this case, it will probably aim for a wage at which the elasticity of demand for workers is
A)0
B)infinite.
C)1
D)ranging from 2 to 5.

Question

Quizplus · Accepted Answer

When the union's goal is to maximize the total income of all workers, it will aim for a wage at which the elasticity of demand for workers is 1. This is because at a wage where the elasticity of demand is 1, the percentage change in the quantity of labor demanded is equal to the percentage change in wages. Therefore, a small increase in wages will lead to a small decrease in the demand for labor, but not enough to offset the increase in wages, meaning the total income of all workers will increase. Any other level of elasticity will either lead to a decrease in total income as a result of decreased employment, or a decrease in income per worker due to overemployment.

Suppose the Goal of a Union Is to Maximize the Total