The diagram below shows the supply and demand for labour in a hypothetical town in northern British Columbia,with only one employer,a logging company. FIGURE 14-4
-Refer to Figure 14-4.Suppose the workers in this town form a union to negotiate the wage rate with the firm.Economists refer to this situation as

Question

The diagram below shows the supply and demand for labour in a hypothetical town in northern British Columbia,with only one employer,a logging company.  FIGURE 14-4
-Refer to Figure 14-4.Suppose the workers in this town form a union to negotiate the wage rate with the firm.Economists refer to this situation as

Quizplus · Accepted Answer

The situation described in the question is an example of a bilateral monopoly, which occurs when there is only one buyer (the employer) and one seller (the union) in the labour market. The union has some bargaining power to negotiate a higher wage rate, but the employer also has some market power to resist wage increases. Therefore, the wage rate and level of employment will be determined through negotiations between the two sides. None of the other answers accurately describe this situation.

The Diagram Below Shows the Supply and Demand for Labour