Unions often oppose increases in the prices of complementary inputs. (For example, truck drivers may oppose increases in taxes on diesel fuel.) They do this because increases in the prices of complementary inputs might
A) increase the supply of competing labor through the output effect.
B) increase the supply of competing labor through the substitution effect.
C) decrease the demand for union labor through the output effect.
D) decrease the demand for union labor through the substitution effect.

Question

Quizplus · Accepted Answer

Increases in the prices of complementary inputs, like diesel fuel for truck drivers, can lead to higher costs for companies, reducing the demand for the services that require union labor, thus decreasing the demand for union labor through the output effect.

Unions Often Oppose Increases in the Prices of Complementary Inputs