Question

A)

The table below shows the quantity demanded and supplied in the labor market for economics professors at the I'MaState University, where all the professors belong to a union. If no union existed, the equilibrium salary for economics professors will be_? Annual Salary Quantity of workers demanded Quantity of workers supplied $45,000 95 20 $55,000 80 30 $60,000 65 40 $75,000 50 50 $95,000 35 60 $100,000 20 70 $75,000 $80,000 $100,000 $60,000

B)

Answer 1

A) At equilibrium quantity demand is equal to quality supply . So according to table at annual salary of $75000 both are equal that is both supply and demand are 50..

Correct answer is A ($75000)

B) If the union is able to increase salary by $20000 then salary of professor will be $95000. At salary $95000 Supply of labour is 60 while demand is 35. So there is excess supply of professor due to increase in wages , excess supply is 25 (60-35) .

Correct answer is A ( supply, 25)