To calculate the total amount firms spend on labor each hour, we need to find the difference in wages between Wu and We and multiply it by the number of unionized workers (Qe).
The difference in wages is Wu - We = $42 - $33 = $9 per hour.
Therefore, firms spend $9 * 17,000 = $<<9*17000=153000>>153,000 more on unionized labor each hour.
Therefore, the answer is b. more. The firms spend $153,000 more per hour on unionized labor.
In the figure to the right, suppose thatWe is a wage rate of $33 per hour and Wu is a wage rate of $42 per hour. In addition, Qd is 10,000 workers per hour, Qe is 17,000 workers per hour, and Qs is 21,000 workers per hour. How much more or less do the firms in this industry spend, in total, on the labor employed each hour as a consequence of establishment of the union wage Wu above the equilibrium wage We?
Firms spend a total of$---per hour---a. less, b. more---on unionized labor. (Enter your response as a whole number.)
3 answers
The establishment of a union wage Wu above the equilibrium wage We will result in an excess quantity of labor being supplied.
No, the establishment of a union wage above the equilibrium wage will result in a shortage of labor, not an excess quantity of labor being supplied.