Labor unions are restrained in their wage demands because:

A. legislation limits annual increases in nominal wages to 6 percent.

B. the labor demand curve is downsloping.

C. marginal wage cost curves lie above labor supply curves in most labor markets.

D. most unions deal with monopsonists who have superior bargaining power.

Question

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24 May, 14:03

Labor unions are restrained in their wage demands because:

A. legislation limits annual increases in nominal wages to 6 percent.

B. the labor demand curve is downsloping.

C. marginal wage cost curves lie above labor supply curves in most labor markets.

D. most unions deal with monopsonists who have superior bargaining power.

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Answers (1)

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Titus Gibson · Answer 1

B, the labor demand curve is down-sloping

Explanation:

Wage demands in labor unions are restrained because ultimately the unions are controlled by the government, in a bid by the government to curtail inflation.

Employees or worker that belong to a union have to pay dues either monthly or bi-monthly, etc depending on the setup of the union but workers who do not belong to the union do not pay dues. Alongside this, non union workers can demand for wage increase as they are not under the control of any union.

This makes the labor demand curve slope downwards since the curve tries to show how much worker a firm can employ at different wages.

Cheers.