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Consider an economy with two labor markets, neither of which is unionized. Now suppose a union is establish in one market. a)Show the effect of

Consider an economy with two labor markets, neither of which is unionized. Now suppose a union is establish in one market.

a)Show the effect of the union on the market in which it is formed. In what sense is the quantity of labor employed in this market an inefficient quantity?

b) Show the effect of the union on the non-unionized market. What happens to the equilibrium wage in this market?

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