Problem
Suppose the economy consists of a union and a nonunion sector. The labor demand schedule in each sector is L = 1 ,000,000 - 20w. The total (economywide) supply of labor is 1,000,000, and it does not depend on the wage. All workers are equally skilled and equally suited for work in either sector. A monopoly union in the union sector sets the wage at $30,000. What is the union wage gap? What is the union wage gain? What is the impact of the union on the wage in the nonunion sector?