Suppose that computer factory workers and cell phone factory workers have no unions. Now suppose that cell phone factory workers form unions. What does this do the labor supply of and wages of workers in computer factories?
A)It increases the labor supply and wages of computer factory workers.
B)It increases the labor supply and decreases the wages of computer factory workers.
C)It decreases the labor supply and increases the wages of computer factory workers.
D)It decreases the labor supply and wages of computer factory workers.

Question

Quizplus · Accepted Answer

When cell phone factory workers form unions, it increases their bargaining power and they are likely to demand higher wages and better working conditions. This could incentivize some workers in computer factories to switch to cell phone factories, which would increase the labor supply in the computer factories and decrease the wages.

Suppose That Computer Factory Workers and Cell Phone Factory Workers