a. Assuming that Walmart has market power in a labor market, explain how the firm could use that market power in setting wages.

b. Draw a graph to illustrate how Walmart might use labor market power to set wages.

Walmart announced it will pay 500,000 workers at least $9 an hour from April 2015 and at least $10 an hour from February 2016. The union-backed group OUR Walmart took credit for the company’s announcement, but a leader of the group said the improved wages fell short of what was needed. Black Friday protesters were demanding $15 an hour.