Question 7

6. Contrasting labor union laws in two states Consider two hypothetical states that operate under different laws governing labor unions. The following graph shows the labor market in a state in the West. Initially, the market-clearing wage in this state is 8.00 per hour. Mow, suppose that the General Assembly in this western state passes a law that makes it easier for workers to join a union. Through collective bargaining, the union negotiates an hourly wage of 10.00. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Graph Input Tool @ Market for Labor 16 14 [ Wage {Do%ars per hour) 2.00 o 12 Labor Demanded Labor Supplied 2 (Thousands of 1,400 {\"Thaus.anapspaf 200 T 1 workers) workers) 2 E s = 2 G w g . 2 o D 200 400 60O E00 1000 1200 1400 1800 LABOR (Thousands of workers) Enter 10.00 into the box labeled Wage on the previous graph. Hint: Be sure to pay attention to the units used on the graph. At the union wage, I:l union workers will be employed. The following graph shows the labor market in a state in the East. Suppose the legislature in this state passes strong "right-to-work" laws that make it very difficult for unions to organize workers, so the wage is always equal to the market-clearing value. Assume that with the exception of this difference in legislation, the western and eastern states are extremely similar The initial position of the graph corresponds to the initial labor market condition in the eastern state before the labor union negeotiated the new, higher wage for workers in the western state. Suppose that after the wage goes up in the western state, some workers in the western state lose their jobs and decide to move to the sastern state. Adjust the graph te show what happens to employment and wages in the eastern state. @ O Sup Demand 0 Supply w 2 S Demand Which of the following groups are worse off as a result of the union action in the western state? Check all that apply. [_] workers in the western state employed at the union wage employers in the western state L] The original workers in the eastarn state [_] workers who find new jobs in the eastern state 7. The theory of efficiency wages Why might some firms choose to pay workers a wage above the market equilibrium, even with a surplus of labor in the market? Check all that apply. [J Paying higher wages encourages workers to be more productive. [J Paying higher wages can reduce a firm's training costs. [J Ppaying higher wages tends to reduce the average experience level of a firm's workers. [J paying higher wages enhances workers to adopt healthier lifestyles, enhancing their productivity. (LN 4 [0 Save & Continue