In terms of supply and demand, unions decrease the supply of labor, driving up wages and reducing employment.

Question

Quizplus · Accepted Answer

This statement is true according to the basic concepts of supply and demand in labor markets. Unions negotiate collective bargaining agreements that set minimum wages and benefits for unionized workers, which can increase the cost of labor for employers. This reduces the supply of labor because employers may hire fewer workers or substitute capital for labor to avoid higher wages. As a result, wages may go up for unionized workers but there could be a reduction in employment opportunities for non-unionized workers or for unionized workers outside the unionized sector.

In Terms of Supply and Demand, Unions Decrease the Supply