refer to the following graph, in which π1 and π2 are a firm’s isoprofit curves. The monopoly union outcome is given by point ū.

-Compared to the monopoly union outcome,wage and employment contracts along the bargaining curve between x and y entail:
A)higher utility to the union and higher profits to the firm
B)higher utility to the union but lower profits to the firm
C)higher profits to the firm but lower utility to the union
D)lower utility to the firm and lower profits to the firm

Question

refer to the following graph, in which π1 and π2 are a firm’s isoprofit curves.  The monopoly union outcome is given by point ū.

-Compared to the monopoly union outcome,wage and employment contracts along the bargaining curve between x and y entail:
A)higher utility to the union and higher profits to the firm 
B)higher utility to the union but lower profits to the firm 
C)higher profits to the firm but lower utility to the union 
D)lower utility to the firm and lower profits to the firm

Quizplus · Accepted Answer

Contracts along the bargaining curve between x and y represent a negotiated compromise between the union and the firm, leading to outcomes that are more efficient and mutually beneficial compared to the monopoly union outcome. This results in higher utility for the union and higher profits for the firm.

Refer to the Following Graph, in Which π1 and π2