Question #1 (30 points) At the competitive wage of $30 per hour, firms A and B both hire 3,000 workers (each working 1,0

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Question 1 30 Points At The Competitive Wage Of 30 Per Hour Firms A And B Both Hire 3 000 Workers Each Working 1 0 1 (28.5 KiB) Viewed 28 times

Question #1 (30 points) At the competitive wage of $30 per hour, firms A and B both hire 3,000 workers (each working 1,000 hours). The elasticity of demand is -3.0 and -0.5 at firms A and B respectively. Workers at both firms then unionize and negotiate a 15 percent wage increase. (a) What is the employment effect at firm A? (b) How has the total worker income changed for firm A? (c) What is the employment effect at firm B? (d) How has the total worker income changed for firm B? (e) How much would the workers at each firm be willing to pay in annual union dues to achieve the 15% gain in wages? Assume that reductions in employment come from reducing the number of workers hired, and not by reducing the number of hours worked by each worker. (f) Is firm A's union or firm B's union likely to face more criticism from the workers? Provide a reason.