If an industrial union is able to negotiate a wage above the competitive market-clearing wage, employment in the industry will increase.

Question

Quizplus · Accepted Answer

If an industrial union negotiates a wage above the market-clearing wage, employers may not hire as many workers, leading to a potential decrease in employment. This is because the higher wage increases labor costs for the employer, making it more expensive to hire workers. As a result, employers may reduce their demand for labor, and some workers may remain unemployed.

If an Industrial Union Is Able to Negotiate a Wage