24 a Assuming that Wal-Mart has market power in a labour market, explain how the firm could use that market power in setting wages.

b Draw a graph to illustrate how Wal-Mart might use labour market power to set wages. Today, Wal-Mart employs more people – 1.7 million – than any other private employer in the world. With size comes power: Wal-

Mart’s prices are lower and United Food and Commercial Workers International Union argues that Wal-Mart’s wages are also lower than its competitors. Last year, the workers at a Canadian outlet joined the union and Wal-Mart immediately closed the outlet.

But does Wal-Mart behave any worse than its competitors? When it comes to payroll, Wal-Mart’s median hourly wage tracks the national median wage for general merchandise retail jobs