The diagram below represents the supply curve of labour in a market where a trade union has negotiated a minimum wage - Leaving Cert Economics - Question 6 - 2014
Question 6
The diagram below represents the supply curve of labour in a market where a trade union has negotiated a minimum wage.
Tick (✓) True or False after each of the foll... show full transcript
Worked Solution & Example Answer:The diagram below represents the supply curve of labour in a market where a trade union has negotiated a minimum wage - Leaving Cert Economics - Question 6 - 2014
Step 1
W1 is the minimum wage rate in the above diagram.
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Answer
True. The diagram clearly illustrates that W1 represents the minimum wage rate set by the trade union, as it acts as a price floor in the labor market.
Step 2
Trade Union members will work below wage rate W1.
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Answer
False. Trade Union members will not work below the minimum wage rate W1, as the purpose of the trade union is to negotiate better wages and working conditions for its members.
Step 3
As the wage rate increases above W1, the supply of labour decreases.
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Answer
False. Generally, as the wage rate increases above W1, the supply of labor tends to increase, since higher wages attract more workers to the labor market.
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