refer to the following graph, in which all product markets are assumed to be competitive.'

-If all displaced union workers opt to remain in the union sector hoping to be recalled,the area corresponding to the efficiency loss of the union wage increase is:

Question

refer to the following graph, in which all product markets are assumed to be competitive.'

-If all displaced union workers opt to remain in the union sector hoping to be recalled,the area corresponding to the efficiency loss of the union wage increase is:

Quizplus · Accepted Answer

The efficiency loss of a union wage increase, when displaced workers remain in the union sector hoping to be recalled, is represented by the area under the demand curve and above the supply curve between the initial and new equilibrium points. This area corresponds to the triangle eabf, which captures the lost output due to the wage increase causing employment to decrease from the non-unionized wage equilibrium to the unionized wage equilibrium.

Refer to the Following Graph, in Which All Product Markets