Which of the following factors will reduce considerably the ability of a union to raise the wages of its workers?
A) an elastic demand for the goods produced by union labor
B) weak foreign competition for the product union labor helps to produce
C) high tariffs on goods produced by the union labor
D) favoritism in the allocation of government contracts to firms that employ union labor

Question

Quizplus · Accepted Answer

If the demand for goods produced by union labor is elastic, this means that consumers are very sensitive to changes in price. As such, if the union raises wages (and therefore prices for goods produced), demand will decrease, leading to a reduction in sales and potentially layoffs. This reduces the union's bargaining power in negotiations for higher wages.

Which of the Following Factors Will Reduce Considerably the Ability