Question Three. 1. Look at the diagram below. Consider the scenario where citizens have almost all the bargaining power.

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Question Three. 1. Look at the diagram below. Consider the scenario where citizens have almost all the bargaining power.

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Question Three 1 Look At The Diagram Below Consider The Scenario Where Citizens Have Almost All The Bargaining Power 1
Question Three 1 Look At The Diagram Below Consider The Scenario Where Citizens Have Almost All The Bargaining Power 1 (154.98 KiB) Viewed 64 times
Question Three. 1. Look at the diagram below. Consider the scenario where citizens have almost all the bargaining power. What will be the equilibrium outcome in this scenario (draw it on the graph)? (4) 100 Slope - Business MRS Iso unit cost, firm's "shutdown' condition In this region, the firm shuts down Quality of the environment, E In this region citizens leave town Slope of citizens indifference curves - MRS Citizens' reservation indifference curve leave town condition 1 w Wages 2. What are some factors that could give citizen's more bargaining power? Why would it not be perfect (in other words why would they not have all the bargaining power)? (4) 3. Bonus. What is the economic logic for why w* stays fixed? (Not the mathematical reason). (2)
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