Consider two labour markets in which jobs are equally attractive in all respects other than the wage rate.All workers are equally able to do either job.Initially, both labour markets are perfectly competitive.If a union organizes workers in one of the markets, then the wage rates will tend to
A)rise in both markets.
B)fall in both markets.
C)rise for the union jobs, but remain unchanged for the non-union jobs.
D)rise for the union jobs and fall for the non-union jobs.

Question

Quizplus · Accepted Answer

When a union organizes workers in one market, it typically negotiates higher wages for those jobs. As a result, some workers may leave the non-union market to join the unionized one, increasing the labor supply in the non-union market and causing wages there to fall.

Consider Two Labour Markets in Which Jobs Are Equally Attractive