Answer the following questions based on the diagram below, in which Ij and I2 arethe indifferent curves of labour union, Tị and n2 are the isoprofit curves, and DL is thelabour demand curve. Wc is the wage rate in a perfectly competitive market.I2WcDLQcQuantity of labourWage rate Now assume that the labour union doesn't have the power to determine wage rate.But both the firm and labour union will bargain to determine the wage rate (W)and level of employment (Q). Label the following points in the diagram:a) Point 'B' that shows the combination of W and Q that makes the union bettaroff but the firm is no worse offb) Point 'D' that shows the combination of W and Q that makes the firm betteroff but the union is no worse offc) Point C' that shows the combination of W and Q that makes both the firm andunion better off

Given information: I1 and I2 are indifference curves of Labour Unionπ1 and π2 are isoprofit curves…

Answer the following questions based on the diagram below, in which I1 and Iz are the indifferent curves of labour union, t¡ and n2 are the isoprofit curves, and DL is the labour demand curve. Wc is the wage rate in a perfectly competitive market. I2 Wc DL Qc Quantity of labour Wage rate

Answer the following questions based on the diagram below, in which I1 and Iz are the indifferent curves of labour union, t¡ and n2 are the isoprofit curves, and DL is the labour demand curve. Wc is the wage rate in a perfectly competitive market. I2 Wc DL Qc Quantity of labour Wage rate

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter16: The Markets For Labor, Capital, And Land

Section: Chapter Questions

Problem 8P

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Question

100%

Now assume that the labour union doesn't have the power to determine wage rate.
But both the firm and labour union will bargain to determine the wage rate (W)
and level of employment (Q). Label the following points in the diagram:
a) Point 'B' that shows the combination of W and Q that makes the union bettar
off but the firm is no worse off
b) Point 'D' that shows the combination of W and Q that makes the firm better
off but the union is no worse off
c) Point C' that shows the combination of W and Q that makes both the firm and
union better off

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