alleryStart learning →A union that wins higher wages without any productivity gain raises the firm's:
ANumber of jobs offered
BAmount of capital used
CCost per unit of output
DOutput per worker hour
Answer & Solution
Correct answer: C. Cost per unit of output
1. Wages and productivity have to be weighed against each other.
2. From the firm's point of view, the key question is whether higher wages are matched by higher productivity.
3. If productivity does not rise, the extra wage is not offset by extra output.
4. The firm then pays more for the same output.
5. So its cost per unit of output rises.
_Source: OpenStax Principles of Microeconomics for AP Courses 2e (CC BY 4.0), Ch 15 'Labor Markets and Income'_
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