Figure 19-3
The manufacturing labor market.

-Refer to Figure 19-3.Suppose the manufacturing labor market,which is non-unionized,is in equilibrium at a wage equal to $30.Suppose now that the AFL-CIO (a labor organization)organizes the workers in the manufacturing market and negotiates a wage of $38 per hour.After the workers become unionized,how many workers do manufacturing firms collectively hire?

Question

Figure 19-3
The manufacturing labor market.
 
-Refer to Figure 19-3.Suppose the manufacturing labor market,which is non-unionized,is in equilibrium at a wage equal to $30.Suppose now that the AFL-CIO (a labor organization)organizes the workers in the manufacturing market and negotiates a wage of $38 per hour.After the workers become unionized,how many workers do manufacturing firms collectively hire?

Quizplus · Accepted Answer

The correct answer is A.After the workers become unionized, the wage increases from $30 to $38 per hour. This will lead to a decrease in the quantity of labor demanded by manufacturing firms. The new equilibrium quantity of labor will be at the point where the supply curve intersects the new demand curve. This point is at a wage of $38 per hour and a quantity of labor of 130 workers.

Figure 19-3 The Manufacturing Labor Market