Because the demand for a broadly defined product line (automobiles, for example) is less elastic than the demand for a more narrow product category (Fords, for example), a union will be better able to raise wages without large unemployment effects when
A) it has organized an entire industry rather than only one firm.
B) it organizes only a few firms in each industry.
C) it bargains with all firms in a narrow product line but ignores the rest of the industry.
D) only a small part of the industry that makes the broadly defined product is unionized.

Question

Quizplus · Accepted Answer

When a union can organize an entire industry rather than only one firm, it has more bargaining power and can negotiate for higher wages without causing large unemployment effects. This is because the demand for a broadly defined product line is less elastic, meaning consumers are less likely to switch to a substitute product if prices increase. When the entire industry is unionized, it is more difficult for employers to substitute labor or move production to non-unionized firms, giving the union more leverage in wage negotiations.

Because the Demand for a Broadly Defined Product Line (Automobiles