Effect of unionization on local markets

1. ADJUST THE GRAPH by shifting the demand and/or supply lines left or right:

Consider a small town economy with only two sectors: coal mining and logging. Both sectors are perfectly competitive, and workers are equally able and willing to work as miners (coal industry) and lumberjacks (logging). Only outside companies demand the coal and wood produced in the city, so changes in the domestic labor market do not affect the product demand curve in either sector.

Suppose a union forms in the logging industry. The union limits its membership to less than the number of workers employed before the union formed and forces all employers in the industry to hire only union workers.

Show the effect of unionization in the logging sector on the labor market for miners.

Tool tip: Click and drag one or both of the curves. Curves will snap into position, so if you try to move the curve and it snaps back to its original position, just try again and drag it a little farther.

O Labor supply Labor demand Labor supply WAGE Labor demand QUANTITY OF LABORO Supply Demand O Supply PRICE Demand QUANITYA union of this sort, which raises wages by reducing the labor supply, is called: An industrial (or inclusive) union A craft (or exclusive) union A demand enhancement union A bilateral monopoly