Question

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.

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