Question: Suppose that in a monopoly union framework the union maximises its wage bill and the firm's labour demand curve can be approximated by a straight line.
(a) What happens to the level of employment and the wage paid if demand in the product market increases? What happens to profits?
(b) What happens to the level of employment and the wage paid if the firm introduces a technical innovation which increases the marginal physical product of labour at each level of output?
(c) Are these results altered if we assume that the firm maximises rents rather than the wage bill?