If a union is able to bargain for a wage that is higher than the equilibrium, this means that:
A)all workers will earn a wage equal to their value of marginal product.
B)some excess supply of labor or unemployment will result at this wage rate.
C)compensating differentials will be erased in this market.
D)diminishing returns will not exist in this market.

Question

Quizplus · Accepted Answer

If the union is able to bargain for a wage higher than the equilibrium, employers may not be able or willing to hire as many workers at that wage rate, leading to excess supply of labor or unemployment. This is because the higher wage would increase the cost of hiring workers, which can lead to lower profits for the employer or higher prices for consumers. Therefore, some workers may be left without a job or with reduced hours of work.

If a Union Is Able to Bargain for a Wage