Figure 19-6
-Refer to Figure 19-6. This figure depicts labor demand and supply for the widget industry. The equilibrium market wage is $15. If a labor union forms within the widget industry and subsequently negotiates an hourly wage of $20.00, how many hours of labor will be demanded by the widget industry?
A)20 labor hours.
B)30 labor hours.
C)60 labor hours.
D)80 labor hours.

Question

Figure 19-6​ 
-Refer to Figure 19-6. This figure depicts labor demand and supply for the widget industry. The equilibrium market wage is $15. If a labor union forms within the widget industry and subsequently negotiates an hourly wage of $20.00, how many hours of labor will be demanded by the widget industry?
A)20 labor hours. 
B)30 labor hours. 
C)60 labor hours. 
D)80 labor hours.

Quizplus · Accepted Answer

With a negotiated wage of $20, the new wage exceeds the equilibrium wage. Therefore, there will be a surplus of labor supplied in the market. At the same time, the higher wage will reduce the quantity of labor demanded by employers, resulting in a lower quantity demanded. The new quantity of labor demanded can be found by looking at the labor demand curve where it intersects the wage of $20. This occurs at a quantity of 30 labor hours, which is the answer.

Figure 19-6​ -Refer to Figure 19-6. This Figure Depicts Labor Demand and Labor

Figure 19-6 -Refer to Figure 19-6. This Figure Depicts Labor Demand and Labor