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Suppose a Labour Union Enters a Competitive Labour Market and Is

Question 37

Multiple Choice

Suppose a labour union enters a competitive labour market and is successful in raising wages above the competitive equilibrium level.In this situation,


A) each firm in the industry will face a horizontal supply curve for labour at the union wage,up to the maximum quantity of labour that is prepared to work at that wage.
B) those workers already employed will earn a lower wage than before.
C) employment in the industry will surely increase.
D) the market supply curve for labour will be upward sloping over its entire range.
E) the number of firms in the industry will increase and the demand for labour curve will shift to the right,causing a subsequent increase in the wage.

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