When a union successfully negotiate a wage greater than the equilibrium wage:?

Question

a. excess demand for labor is created

b. surplus of labor is created

c. the demand for labor increases

d. the supply of labor increases

e. the quantity of labor demanded increases

Answer 1

well first let me tell you answers a and b are exactly the same and so are answers d and e but to tell you the truth i dont really know the answer but i would go with probably d or e but really none of the answers seem right to me

Answer 2

1. People who have to hire from the union try to minimize the number of people they hire.

2. Workers try to join the union so that they can get the higher paying jobs.

3. Whether they succeed or not depends on the union. Many of the unions who successfully negotiated very high wages were very hard to get into - nepotism was the rule. This means that you can't come to a conclusion as to whether the supply actually increases.

4. As part of #3, you also see an incentive for and a rise in the amount of fraud.

5. As part of #1, people try to get around the restrictions on hiring union workers.

Some classic examples:

A. The entertainment unions have much higher than equilibrium rates but getting into the union isn't all that hard so you have a surplus of labor. But once a member, you can't work at less than union rates:

http://en.wikipedia.org/wiki/Screen_Acto...

http://www.wsws.org/articles/2003/mar200...

B. At the other extreme were some of the craft unions such as the electricians:

http://matthewyglesias.theatlantic.com/a...

C. In between is the most successful union of all time - the AMA. They restrict entry with a vengeance - many more are good enough to graduate from medical schools than are allowed to try - and have gotten government support all the way - so that they can charge higher rates.

(Compare with lawyers, where all have to take the same bar exam, but there are high end law schools and low end ones and the result is that we have a significant oversupply of lawyers and widely different hourly rates on the part of lawyers.)