Consider an economy with two labor marketsone for manufacturing workers and one for service workers. Suppose initially
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Consider an economy with two labor markets—one for manufacturing workers and one for service workers. Suppose initially that neither is unionized.
a. If manufacturing workers formed a union, what would you expect to happen to the wages and employment in manufacturing?
b. How would these changes in the manufacturing labor market affect the supply of labor in the market for service workers? What would happen to the equilibrium wage and employment in this labor market?
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