Labor unions cause unemployment because the union contract wage is set
A)below the market wage,causing a shortage of labor.
B)below the market wage,causing a surplus of labor.
C)above the market wage,causing a surplus of labor.
D)above the market wage,causing a shortage of labor.

Question

Quizplus · Accepted Answer

When a labor union sets a wage that is above the market wage, this means that employers are paying more to their employees than they would have to otherwise. This leads to an excess supply of labor, as more people are willing to work at the higher wage than there are available jobs. As a result, employers are forced to reduce their workforce, leading to higher levels of unemployment.

Labor Unions Cause Unemployment Because the Union Contract Wage Is