Problem
Unions can raise wages paid to their members in two ways. (i) Unions can negotiate a wage rate that lies above the market clearing wage. While management cannot pay below that rate, management does have the right to decide how many workers to hire. (ii) Construction unions often have agreements that require management to hire only union members, but they also have the power to control entry into the union. Hence, they can raise wages by restricting labor supply.
a. Graphically depict method (i) above using a labor supply and a labor demand curve. Show the market-clearing wage as We, the market-clearing employment level as Le, the (higher) negotiated wage as Wu, the level of employment associated with Wu as Lu, and the number of workers wanting to work at Wu as Ls.
b. Graphically depict method (ii) above using a labor supply and a labor demand curve. Show the market-clearing wage as We, the market-clearing employment level as Le, the number of members the union decides to have as Lu(which is less than Le), and the wage associated with Lu as Wu.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.