Answered: There are 100 workers. In 2084, after…

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter19: Labor And Entrepreneurship: The Human Inputs

Section: Chapter Questions

Problem 5DQ

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a. There are 100 workers. In 2084, after decades of complaining about low wages, the programmers at Robotron have a secret-ballot vote and form a union. Their new union bargains for a wage of $80 per hour, and the newly unionized programmers are very excited. How many workers will Robotron hire at the new, higher wage?

There will be _____ workers at Robotron after unionization.

b. Suppose there were 65 workers at Robotron before unionization. How many Robotron workers just got laid off?

After unionization, ______Robotron workers will be laid off.

c. A natural choice for the other programmers is to look for work at Korrexia: As before, the remaining workers have perfectly inelastic labor supply, so all 100 workers are going to work at one of the two firms. How many programmers work for Korrexia? What’s the wage for the nonunion Korrexia workers?

Korrexia will hire ____workers.

Korrexia workers will earn wages of $ ____

d. You might think that one solution is to unionize both firms and lift wages for all the programmers. If the unions negotiate a high-wage contract and unionized wages rise to $110 at both firms, how many of the 100 workers will have jobs?

At a wage of $110, ____workers will have jobs.

Unions can raise wages in a sector of the economy by restricting the number of workers in that sector. Let's see what tends to
happen to the workers who don't get jobs in those favored unionized sectors. We'll recycle the computer programmer data to
illustrate:
Number of Programmers
Robotron's
Korrexia's
per Firm
MPL ($)
MPL ($)
10
200
110
20
150
80
30
120
60
40
110
50
50
80
40
60
60
20
70
50
10
80
40
90
20
100
10

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