Refer to Figure 9-5. The increase in domestic producer surplus as ...

[clmills979]

Refer to Figure 9-5. The increase in domestic producer surplus as a result of the tariff is equal to
 
  A) 11.25 million. B) 18 million. C) 32.5 million. D) 45 million.

Question 2

How do labor unions influence wage rates?
 
  What will be an ideal response?

[gabrielle_lawrence]

Answer to Question 1

A

Answer to Question 2

Unions increase their members' wage rates by increasing the demand for their members' labor and decreasing the supply of labor. In particular, to increase the demand for their members' labor, unions: increase the value of marginal product of union members by sponsoring training schemes and apprenticeship programs; encourage import restrictions so that consumers must buy goods and services produced by union members; and, support minimum wage laws to raise the wage of a substitute for their members' labor. Unions also try to restrict the supply of labor, say by supporting immigration restrictions to decrease the supply of low-skilled labor. By decreasing the supply of low-skilled labor, the wage rate paid low-skilled labor rises, which increases the demand for high-skilled union labor.