Question

When a union raises the wage above the equilibrium level, it raises the quantity of labor supplied and reduces the quantity of labor demanded, resulting in higher unemployment.
True or False?

Answer 1

Answer:

True

Explanation:

When wage is above equilibrium wage, there would be excess of supply over demand. The quantity of labour demanded would rise.

The rise in wages would increase the cost of hiring labour. In order to maximise profit, the quantity of labour demanded would fall. This would increase unemployment.

I hope my answer helps you.