Consider a market with two sectors. The labour demand in Sector A is given by LDA=127-1.8WA and labour demand in Sector B is given by LDB-109-3wB. Suppose overall labour supply is LS-109, where 109 is the number of workers in the market. A. The aggregate labour demand curve has vertical intercept is and slope . The competitive wage would be w=$ if we assume perfect competition in a neoclassical model. B. Suppose a union forms in sector A. If the union sets the wage at $31, there will be workers employed in sector A. Sector B will now emplloy workers and the wage in sector B will be $ Of the workers previously employed in sector A, there are For union workers, the relative wage gap who have spilled over into sector B. In this economy the union density % while the relative wage gain is %. The counterfactual wage is $ workers will spill over into sector B and the wage in sector B will be wg=$ C. When the wage is set at $31, suppose the contract curve is vertical. In this case we know that contract curve is not vertical. If 9 workers decide to wait unemployed in sector A, the wage in sector B will be wg=$ %. . Now instead suppose the