Question

When labor unions successfully bargain for wage rates that are _____ the equilibrium wage rate, they may cause _____. higher than; an increase in structural unemployment equal to; shortages in that labor market lower than; frictional unemployment higher than; shortages in that labor market

Answer 1

Answer:

When labor unions successfully bargain for wage rates that are HIGHER THAN the equilibrium wage rate, they may cause AN INCREASE IN STRUCTURAL UNEMPLOYMENT.

Explanation:

When a labor union bargains for wages that are above equilibrium rate, this will produce the same effect as a price floor. The supply of labor will increase, while the demand for labor will decrease. This deadweight loss generated by high wages will result in an excess supply that will eventually lead to higher structural unemployment.