Consider an economy characterized by "real-wage rigidity" due to unions keeping the real wage above its market-clearing level. a) Depict this situation using a labor market diagram. Show the labor demand, labor supply and employment levels on your diagram. Explain whether there is unemployment in this economy. b) What is the effect of real-wage rigidity on the output supplied by firms, relative to the output they would supply if the real wage were at its market-clearing level? c) Now suppose that the retirement age has been increased. Show the effect of this change on the labor demand, labor supply and employment levels using a labor market diagram. How would this change affect the unemployment level?