Question

Given the information in Problem 29-17, how much more or less do the firms in this industry spend, in total, on the labour employed each hour as a consequence of the establishment of the union wage WU= \(40 per hour above the equilibrium wage We= \)30 per hour?

Short answer

The industry spends $\$30000$more

Step-by-step solution

Given Information

Collective bargaining is the cycle wherein working individuals, through their unions, arrange contracts with their bosses to decide their terms of business, including pay, benefits, hours, leave, work wellbeing and security strategies, ways of adjusting work and family.

Explanation

Expenditure by the union when the wage rate is$\$30$= $\mathrm{\$}30\times 15,000=\mathrm{\$}450,000$

Expenditure by the union when the wage rate is $\$40$=$\mathrm{\$}40\times 12,000=\mathrm{\$}480,000.$

The excess expenditure by the union = $\mathrm{\$}480000-450000=\mathrm{\$}30,000$

Hence the industry spends$\$30000$more.