Final answer:
A labor union functions like a monopoly in the labor market, demanding higher wages that result in firms hiring fewer workers and creating an excess supply of labor.
Step-by-step explanation:
A labor union in a labor market is analogous to a monopoly in an output market. In both scenarios, one entity has significant control over the market. A union, similar to a monopoly, can demand higher wages, known as union wage Wu, but this leads to firms hiring less labor than they would at equilibrium, creating an excess supply of workers who desire union jobs, yet aren't hired due to increased labor costs.
Just as a labor union has the power to negotiate on behalf of workers and influence the wages and working conditions in the labor market, a monopoly has the power to set prices and control the supply of a product in the output market.