Asked by Oppong Bright on Jul 02, 2024
Verified
If a firm operates in a competitive industry and its unionized labor force is successful in bargaining for a wage increase, where is the firm likely to get the money to pay the higher wages?
Unionized Labor
Workforce that is organized into a union, negotiating collectively for wages, benefits, and working conditions.
Wage Increase
An upward adjustment in employees' earnings per hour worked or salary.
- Determine the outcomes of unions effectively increasing wages for their members and the wider labor market.
- Evaluate the influence of labor unions on productivity levels and investment decisions.
Verified Answer
WV
Wilberth Velazquez7 days ago
Final Answer :
If it is a competitive industry, the owners are likely to be earning the normal return, so paying out of profits would not be an option. Also, competition limits the firm's ability to raise its price and pass along the increase to consumers. It is most likely that the firm will cut other costs. A strong possibility is that this will result in fewer employees.
Learning Objectives
- Determine the outcomes of unions effectively increasing wages for their members and the wider labor market.
- Evaluate the influence of labor unions on productivity levels and investment decisions.
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