This chapter has assumed that labour is supplied by individual workers acting competitively. In some markets, however, the supply of labour is determined by a union of workers.

a. Explain why the situation faced by a labour union may resemble the situation faced by a monopoly firm.

b. The goal of a monopoly firm is to maximize profits. Is there an analogous goal for labour unions?

c. Now extend the analogy between monopoly firms and unions. How do you suppose that the wage set by a union compares to the wage in a competitive market? How do you suppose employment differs in the two cases?

d. What other goals might unions have that make unions different from monopoly firms?