How do labor unions affect the economy?
A. They decrease demand by opposing low prices.
B. They increase supply by keeping workers healthy.
C. They decrease supply by increasing worker wages.
D. They increase demand by ensuring ethical production.
C. They decrease supply by increasing worker wages.
Labor unions can have various effects on the economy. The correct answer is C. They decrease supply by increasing worker wages.
Labor unions strive to protect the rights and interests of workers by negotiating better working conditions, higher wages, and improved benefits. When labor unions are successful in negotiating higher wages for workers, it increases the cost of labor for employers. As a result, businesses may find it more expensive to hire workers, leading to a decrease in the supply of labor available in the market.
The decrease in labor supply can have several consequences for the economy. It may lead to higher costs for businesses, which could be passed onto consumers in the form of higher prices for goods and services. This can potentially decrease demand as consumers face increased costs. It might also discourage businesses from expanding or investing in new projects, resulting in slower economic growth.
It is worth noting that labor unions can also have positive effects on the economy. By negotiating for better wages and working conditions, they help ensure that workers have a higher standard of living. This can increase the disposable income of workers, leading to higher consumer spending and stimulating demand in the economy. Additionally, labor unions often advocate for improved workplace safety, which can result in a healthier and more productive workforce.
The correct answer is C. Labor unions decrease supply by increasing worker wages.
First, let's understand what a labor union is. A labor union is an organization that represents and advocates for the rights and interests of workers in a particular industry or occupation.
When labor unions negotiate collective bargaining agreements with employers, they often seek to increase wages, improve working conditions, and secure benefits for their members. These improvements come at a cost to the employers, as they have to allocate more resources to meet the demands of the workers.
As a result of increased wages, the cost of labor for employers rises. This can lead to higher production costs for goods and services. In turn, higher production costs can cause businesses to reduce their supply of goods and services, as they may find it economically unviable to produce as much.
Additionally, labor unions may also advocate for other benefits such as decreased working hours, which can further decrease the overall supply of labor. If workers are working fewer hours, businesses may have fewer resources available to produce goods and services, resulting in a decrease in supply.
Therefore, labor unions affect the economy by decreasing supply through their efforts to increase worker wages and improve working conditions.