Question

When unions raise wages in some sectors of the economy, the supply of labor in other sectors of the economy:

A) Increases
B) Decreases
C) Remains unchanged
D) Fluctuates randomly

Answer 1

When unions raise wages in some sectors of the economy, the supply of labor in other sectors decreases.B) Decreases

Step-by-step explanation:

When unions raise wages in some sectors of the economy, the supply of labor in other sectors of the economy decreases. This is because when wages increase in one sector, more workers are attracted to that sector, causing a decrease in the supply of labor in other sectors.

For example, let's say that a union successfully negotiates higher wages for construction workers. This increase in wages makes working in the construction industry more attractive, so workers from other sectors, such as manufacturing or retail, may choose to switch to construction. As a result, the supply of labor in manufacturing or retail decreases.

The decrease in the supply of labor in other sectors can lead to various consequences such as labor shortages, higher wages in those sectors, or increased competition for jobs.