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Trade Unionism And Labour

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TRADE UNIONISM AND LABOUR 1
Trade Unionism and Labour
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TRADE UNIONISM AND LABOUR 2
Q1
The statement is False because the maximization of profits by firms happens at given marginal
revenue and marginal cost is given that both the marginal revenue and marginal cost are equal.
Besides, maximization of profits may happen at varied points on a demand curve. In this regard,
because different points would give different profits, a person/management may prefer a
particular point over another.
Q2
a)
Given that:
Both sectors have identical labor demand
Labor is homogenous
Therefore, both sectors will be served by 1,000,000 workers.
The labor demand equation is as follows:
   
   
 

b) Given that the wage rate is $12 per hour, sector 1 will employ:
  
But
= $12, so:
  

c) Sector 2 will have the following workers
Number of workers in the non-unionized sector = 2,000,000 600,000
= 1,400,000 workers
Wage rate:
   

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TRADE UNIONISM AND LABOUR 1 Trade Unionism and Labour Your name University Course Instructor's name Date TRADE UNIONISM AND LABOUR 2 Q1 The statement is False because the maximization of profits by firms happens at given marginal revenue and marginal cost is given that both the marginal revenue and marginal cost are equal. Besides, maximization of profits may happen at varied points on a demand curve. In this regard, because different points would give different profits, a person/management may prefer a particular point over another. Q2 a) Given that: Both sectors have identical labor demand Labor is homogenous Therefore, both sectors will be served by 1,000,000 workers. The labor demand equation is as follows: 1000000 = 1800000 − 100000𝑤 1000000 − 1800000 = −100000𝑤 −800000 = −100000𝑤 𝑤 ∗ = $8 𝑝𝑒𝑟 ℎ𝑜𝑢𝑟 b) Given that the wage rate is $12 per hour, sector 1 will employ: 𝐸1 = 1800000 − 100000𝑤1 But 𝑤1 = $12, so: 𝐸1 = 1800000 − 100000(12) 𝐸1 = 600000 𝑤𝑜𝑟𝑘𝑒𝑟𝑠 c) Sector 2 will have the following workers Number of workers in the non-unionized sector = 2,000,000 – 600,000 = 1,400,000 workers Wag ...
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