Suppose a union successfully negotiates a wage rate for its members that is above the competitive wage rate, then

Question

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If the wage rate negotiated by the union is above the competitive wage rate, it means that the union workers will be paid more than workers in non-unionized sectors which will increase the number of workers who want to join the union. As a result, the union may have to ration jobs among the excessive number of workers who wish to work at the negotiated wage, which is the best choice. A higher wage rate will also make unionized firms less competitive, which can lead to a decrease in employment in the union sector if production is not increased or if the union does not negotiate fringe benefits that will make up for the higher wage rate. However, option D is a more direct consequence of the wage rate being negotiated above the competitive wage rate.

Suppose a Union Successfully Negotiates a Wage Rate for Its