The control of entry by unions causes higher wage rates by
A)moving the equilibrium point up the labor supply curve.
B)changing the elasticity of the labor supply curve.
C)shifting the labor supply curve to the left.
D)the indeterminacy of collective bargaining.
E)shifting the labor supply curve to the right.

Question

Quizplus · Accepted Answer

When unions control entry, they often put restrictions on the number of workers allowed into a particular field or trade. This reduces the overall supply of labor, causing the labor supply curve to shift to the left. With a decrease in supply, the equilibrium wage rate will rise, resulting in higher wage rates. Therefore, the correct choice is (C) shifting the labor supply curve to the left.

The Control of Entry by Unions Causes Higher Wage Rates