a. Suppose the demand for labor in the BWM automobile industry is expressed as follows:
L = 18,000 − 200w
where is DL is the demand for labor per day (in people) and is the hourly wage
rate (in thousands of dollar).
The labor supply and the union's marginal income are respectively:
SL= 400w
MRu= 18,000 - 500w
Compare the equilibrium level of wages and the number of workers employed if workers do not unionize and if they unionize.Use graphic illustrations to explain the results of your calculations.[hint: if workers are unionized, wages should be higher than if they are not unionized. The graphs you create can help with the calculation logic here.