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Homework answers / question archive / In the figure to the right, suppose that we is a wage rate of $31 per hour and W, is a wage rate of $42 per hour
In the figure to the right, suppose that we is a wage rate of $31 per hour and W, is a wage rate of $42 per hour. In addition, Qj is 11,000 workers per hour, Q. is 15,000 workers per hour, and Q, is 22,000 workers per hour. How much more or less do the firms in this industry spend, in total, on the labor employed each hour as a consequence of establishment of the union wage W, above the equilibrium wage W.? W A B Firms spend a total of $ per hour V on unionized labor. (Enter your response as a whole number.) We Wage Rate ($ per hour) D Quantity of labor per time period
When wage rate is $31, labor demand is 15,000. Total wage bill per hour is 31*15,000 = 465000.
When wage rate is $42, labor demand is 11,000 corresponding to point A. Total wage bill per hour is $42*11,000 = 462000.
Hence, after unionisation, wage bill per hour has fallen by $3000 per hour.
This is because of reduced demand for labour by firms due to costly labor wage.
