Question

Refer to the table and fill in the values missing in the sentences below. Hourly Wage...

Refer to the table and fill in the values missing in the sentences below.

Hourly Wage Quantity Workers Demanded Quantity Workers Supplied
$14 12,000 6,000
$16 10,000 7,000
$18 8,000 8,000
$20 6,000 9,000
$22 4,000 10,000
$24 2,000 11,000

With no union, the equilibrium wage rate would be $   per hour and there would be  employees.

If the union has enough power to raise the wage to $4 higher than under the original equilibrium, the new wage would be $   per hour. At this wage,  workers would be demanded while  would be supplied, leading to an excess supply of  workers.

Homework Answers

Answer #1

With no union, the equilibrium wage rate would be $18 per hour and there would be 8000 employees.

If the union has enough power to raise the wage to $4 higher than under the original equilibrium, the new wage would be $22 per hour. At this wage, 4,000 workers would be demanded while 10,000 would be supplied, leading to an excess supply of 6,000 workers.

Explanation:

The initial equilibrium wage is $18, because at this wage rate quantity demanded of workers is equal to quantity supplied.

When wage rate increases by $4, the new wage rate = $18 + $4 = $22

At a wage rate of $22, quantity demanded = 4,000 workers and quantity supplied = 10,000 workers. So, there is an exxcess supply of 10,000 - 4,000 = $6,000

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