Economics (AS & A Level) · May / June 2022 · Paper 32 · Question 17

The diagram shows the demand for and supply of labour in the construction industry. The labour market is initially in equilibrium when the wage is W1. A trade union wishes to increase the wage but does not wish to decrease employment. The union asks for wage W2. The employers offer wage W3. What would be the best policy to enable the trade union to achieve both its aims?

1. Aaccept W3 and a new equilibrium F
2. Bcontinue to ask for W2 and a new equilibrium G
3. Ckeep W1 with a new equilibrium H
4. Dincrease marginal revenue productivity and a new equilibrium E

As printed in the paper