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WAEC Economics 2013 Question 29

Question 29

Labour Market

Which of the following is the main outcome of a trade union's interference with the wage rate? Wages are

  1. A.lowered but more employment opportunities are created.
  2. B.lowered but employment level remains unchanged.
  3. C.increased and employment levels are unchanged.
  4. D.increased but employment levels are reduced.
Show the answer and explanation

Answer: D (increased but employment levels are reduced.)

Explanation

When a union pushes wages above the market level, employers hire fewer workers.