When a union raises the wage above the equilibrium level,
A)the quantity of labor supplied and unemployment both rise.
B)the quantity of labor supplied and unemployment both fall.
C)the quantity of labor supplied rises and unemployment falls.
D)the quantity of labor supplied falls and unemployment rises.

Question

Quizplus · Accepted Answer

When a union raises the wage above the equilibrium level, more workers are willing to work at the higher wage, increasing the quantity of labor supplied. However, employers hire fewer workers at the higher wage, leading to increased unemployment.

When a Union Raises the Wage Above the Equilibrium Level