In a basic model of wage and employment determination with a monopoly union, the monopoly union stipulates the wage. The firm then responds by choosing an employment level that
A)maximizes profit.
B)minimizes labor costs.
C)minimizes the wage.
D)maximizes strike duration.
E)maximizes output.

Question

Quizplus · Accepted Answer

In a basic model of wage and employment determination with a monopoly union, the firm seeks to maximize its profit. Therefore, it will choose the employment level that maximizes its profit given the stipulated wage by the union.

In a Basic Model of Wage and Employment Determination with a Monopoly