Question 6 Chapter 15 Contrasting labor union laws in two states
Explanation: Close Explanation
You can read from the labor demand curve that, at a wag
... [Show More] e of $12.50, firms demand 375,000 workers, despite the fact that 625,000
workers are willing to supply labor. Thus, 375,000 workers find employment at this wage rate.
6. Contrasting labor union laws in two states
Consider two states that adopt different laws concerning labor unions.
The following graph shows the labor market in a state in the North. Initially, the market-clearing wage there is $10.00 per hour.
Suppose that the legislature in this northern state passes laws that make it easy for workers to join a union. Through collective bargaining,
the union negotiates a wage of $12.50 per hour.
Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.
Enter $12.50 into the box labeled Wage on the previous graph.
Hint: Be sure to pay attention to the units used on the graph.
At the union wage, union workers will be employed.
Points: 1 / 1
The following graph shows the labor market in a state in the South. The legislature in this state passes strong "right-to-work" laws that
make it very difficult for unions to organize workers, so the wage is always equal to the market-clearing value. Except for this difference in
legislation, the two states are very similar.
The initial position of the graph corresponds to the initial labor market condition in the southern state before the labor union negotiated the
new, higher wage for workers in the northern state.
Suppose that after the wage goes up in the northern state, some workers in the northern state lose their jobs and decide to move to the
Graph InputTool
20.0 Market for Labor
17.5 Supply Wage
(Dollars
15.0
12.5
per hour)
Labor
Demanded
(Thousands
of workers)
Labor
Supplied
(Thousands
of workers)
10.0
7.5
5.0 eman
2.5
0
0 125 250 375 500 625 750 875 1000
LABOR (Thousands of workers)
D d
2.50
WAGE (Dollars per hour)
Correct Answer
Explanation: Close Explanation
The shortage of jobs in the northern state causes the population in the southern state to increase as people move there in search of
jobs. An increase in population in the southern state shifts the supply curve to the right. This leads to an increase in the quantity of
labor there and a decrease in the equilibrium wage.
Explanation: Close Explanation
The only group that benefits from the union-negotiated wage of $12.50 is the union workers in the northern state who retain their
jobs after the wage increase. Because the quantity of workers willing to supply labor is greater than the quantity of labor firms are
willing to hire at the union wage, some workers in the northern state will lose their jobs. As some of these workers move to the
southern state.
Adjust the graph to show what happens to employment and wages in the southern state.
Points: 1 / 1
Which of the following groups are worse off as a result of the union action in the northern state? Check all that apply.
The original workers in the southern state
Workers in the northern state employed at the union wage
Workers who find new jobs in the southernstate
Employers in the northern state
Points: 1 / 1
Your Answer
S1 Demand
S2
Supply
Demand
LABOR
WAGE
southern state to find jobs, this puts downward pressure on southern wages, making both the original southern workers and the
workers who came from the North worse off.
The employers in the northern state are also made worse off as they now have to pay higher wages and have fewer employees. [Show Less]