If a union negotiates and obtains a wage rate above the competitive wage rate,
A) it must find a way to make workers more productive.
B) employment in the union sector will increase relative to employment in the nonunion sector.
C) it must find a way to ration jobs among the excessive number of workers who wish to work in the union sector.
D) unemployment will increase in the nonunion sector relative to the union sector.

Question

Quizplus · Accepted Answer

If the union negotiates and obtains a wage rate above the competitive wage rate, it will create an excessive demand for jobs in the union sector. This excess demand will lead to job rationing among the workers who wish to work in the union sector. The union may have to use various strategies such as seniority rules or certification requirements to ration jobs among its members. This will result in unemployment for some workers who are unable to secure employment in the union sector. Therefore, option C is the best choice as it explains this situation. Options A, B, and D are incorrect because they do not accurately describe the outcome of wage negotiations above the competitive wage rate.

If a Union Negotiates and Obtains a Wage Rate Above