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Setting a union wage above the equilibrium wage produces, for union jobs, an:
AExact balance of labor
BImmediate fall in wages
CExcess supply of labor
DExcess demand for labor
Answer & Solution
Correct answer: C. Excess supply of labor
1. A wage above equilibrium has a predictable market effect.
2. The union wage is above what the equilibrium wage would otherwise have been.
3. At a higher wage more people want the jobs and firms want fewer workers.
4. The result is an excess supply of labor for union jobs.
_Source: OpenStax Principles of Microeconomics for AP Courses 2e (CC BY 4.0), Ch 15 'Labor Markets and Income'_
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