Which of the following is true of labor markets?
A) The union can never acquire monopoly power over the labor supply.
B) The union supplies the labor,but the contract has no authority on fixing its price.
C) Unions stay away from employers that have power to influence prices in the product market and/or wages in the labor market.
D) A contracted wage elasticizes the labor supply at the negotiated rate.

Question

Quizplus · Accepted Answer

Unions negotiate contracts that set specific wages for their members, which effectively makes the supply of labor to the employer more elastic at that negotiated wage rate. This is because within the range of wages set by the contract, the employer can hire more workers without having to increase wages, as the union has already agreed to the wage rate for its members.

Which of the Following Is True of Labor Markets