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Suppose the firm's labor demand curve is given by:

w = 20 - 0.01E,

where w is the hourly wage and E is the level of employment. Suppose also that the union's utility function is given by

U = 2w ´ E.

It is easy to show that the marginal utility of the wage for the union is E and the marginal utility of employment is w. What wage would a monopoly union demand? How many workers will be employed under the union contract?

Reference no: EM131334779

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