refer to the following graph, in which Wc is the competitive wage and Ic is the union’s utility level at the competitive wage and employment level. -If this market is best represented by the "monopoly union" model,the union will bargain for: A)W_a and the firm will respond by hiring Q₁ workers B)W_b and the firm will respond by hiring Q₂ workers C)W_a and the firm will respond by hiring Q_c workers D)W_b and the firm will respond by hiring Q_c workers

Question

Quizplus · Accepted Answer

In a monopoly union model, the union aims to maximize its members' wages while the firm aims to maximize profits. The union will bargain for the highest possible wage (W_b) and the firm will respond by hiring the level of employment where the marginal cost equals the marginal revenue product of labor (Q₂). This equilibrium point will maximize the union's utility level (U1) at the highest possible wage rate, while also maximizing the firm's profits. Therefore, option B is the best choice.

Refer to the Following Graph, in Which Wc Is the Competitive