Question

Consider two states that adopt different laws concerning labor unions. 

The following graph shows the labor market in a state in the North. Initially, the market-clearing wage there is $8.00 per hour. 

Suppose that the legislature in this northern state passes laws that make it easy for workers to join a union. Through collective bargaining, the union negotiates a wage of $10.00 per hour. 

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. 

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, _______ union workers will be employed. 

The following graph shows the labor market in a state in the South. 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. Except for this difference in legislation, the two states are very similar. 

The initial position of the graph corresponds to the initial labor market condition in the southern state before the labor union negotiated the new, higher wage for workers in the northern state. 

Suppose that after the wage goes up in the northern state, some workers in the northern state lose their jobs and decide to move to the southern state.

Adjust the graph to show what happens to employment and wages in the southern state.

Which of the following groups are better off as a result of the union action in the northern state? Check all that apply. 

• Workers who find new jobs in the southern state 

• Employers in the northern state 

• The original workers in the southern state 

• Workers in the northern state employed at the union wage

Answer 1

At the union wage, 600000 union workers will be employed

The supply curve in the southern state will shift to the right as supply increases.

O Supply Demand Supply WAGE Demand LABOR

- Workers in the northern state employed at the union wage are better off.