If a union negotiates an industry-wide agreement to set wages above the equilibrium level,
A) the industry's demand curve for labor will shift inward.
B) there will be a surplus of labor in the industry.
C) there will be a shortage of labor in the industry.
D) there will be neither a shortage nor a surplus of labor in the industry.

Question

Quizplus · Accepted Answer

Setting wages above the equilibrium level results in a surplus of labor because at the higher wage, more workers are willing to work than employers are willing to hire.

If a Union Negotiates an Industry-Wide Agreement to Set Wages