3. Consider an economy with two labor marketsone for manufacturing workers and one for

Agriculture sector workers. Suppose initially that neither is unionized.

a) If manufacturing workers formed a union, what impact would you predict on the wages and

employment in manufacturing? (Explain using graph)

b) How would these changes in the manufacturing labor market affect the supply of labor in the

market for agriculture workers? What would happen to the equilibrium wage and employment

in this labor market? (Explain using graph)

c) Based on the scenarios above, how might unemployment rate be an imperfect measure? Briefly

point out all the underlying reasons.