refer to the following graph, in which Wc is the competitive wage and Ic is the union’s utility level at the competitive wage and employment level. -The wage/employment combination given by W_b/Q₂ is: A)efficient B)inefficient in that a slightly lower wage and slightly more employment would leave both the firm and the union better off C)inefficient in that a slightly higher wage and slightly less employment would leave both the firm and the union better off D)inefficient in that firm profits are lower than they would be at W_c/Q_c

Question

Quizplus · Accepted Answer

The point W_b/Q₂ is inefficient because both the firm and the union can be better off with a slightly different wage and employment combination. Specifically, with a slightly lower wage and slightly more employment, the firm can still achieve the same level of profits as at W_b, and the union can achieve a higher utility level than at Ic. Therefore, option B is the correct answer.

Refer to the Following Graph, in Which Wc Is the Competitive