The wage-employment outcomes described by the contract curve
A) fail to exhaust all bargaining opportunities between the employer and the union except for the single point on the contract curve that is associated with maximum wages.
B) are associated with the firm hiring more workers at a higher wage than they would under a monopoly union outcome.
C) are Pareto optimal and result in an efficient contract.
D) must be located below and to the left of the outcome that would result in the absence of a union.
E) must be located above and to the left of the outcome that results when there is a monopoly union.

Question

Quizplus · Accepted Answer

The contract curve represents the set of outcomes that are Pareto optimal, meaning that any move away from this curve would make at least one party worse off without making the other party better off, indicating an efficient contract between the employer and the union.

The Wage-Employment Outcomes Described by the Contract Curve