The table below shows the quan
The table below shows the quantity demanded and supplied in thelabor market for economics professors at the I’MaState University,where all the professors belong to a union.
Annual Salary
Quantity of workers demanded
Quantity of workers supplied
$50,000
95
20
$60,000
80
30
$70,000
65
40
$80,000
50
50
$90,000
35
60
$100,000
20
70
1. If no union existed, the equilibrium salary for economicsprofessors at I’MaState University, will be .
2. If the union has enough negotiating power to raise the annualsalary by $20,000 more than a non-unionized university would bewilling to pay, then there will be excess of labor of economicsprofessors at I’MaState University.
3. Economics professors and economic consultants are perfectsubstitutes. If the union negotiates an annual salary increase foreconomics professors at I’MaState University that is $20,000 higherthan the market wage rate for economic consultants, then the ofeconomic consultants will . This will result in the market wagerate for economic consulting positions to and the quantity ofeconomic consultants employed to
Answer:
1. If no union existed, the equilibrium salary foreconomics professors at I’MaState University, will be .
$80000 where demand for labor is 50 and supply for labor is50
2. If the union has enough negotiating power to raise the annualsalary by $20,000 more than a non-unionized university would bewilling to pay, then there will be excess of labor of economicsprofessors at I’MaState University.
equilibrium wage $80000 labor = 50 (demand and supply)
now if $20,000 is raise , it will reach 100,000 where demand is20 and supply is 70, so excess supply of labor = 70- 20= 50labor
3.
If the union negotiates an annual salary increase for economicsprofessors at I’MaState University that is $20,000 higher than themarket wage rate for economic consultants, then the of economicconsultants will . This will result in the market wage rate foreconomic consulting positions to fall and thequantity of economic consultants employed torise.
reason fall in wage rate leads to demand for economicconsultant and firm will employed them in higher quantity forwork.
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