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Trade unions bargain collectively to raise wages and improve working conditions."},{"text":"A trade union sets prices for firms to increase profits and reduce employment.","correct":false,"explanation":"Unions negotiate over workers’ pay and conditions, not firms’ product prices. Their collective bargaining aims to raise wages and improve working conditions."},{"text":"A trade union restricts workers from changing jobs to increase labour market competition.","correct":false,"explanation":"A union may negotiate collectively, but it does not exist to prevent workers changing jobs. Its role is to improve wages and working conditions through bargaining."}]},{"id":"7812cbad-0ae1-4707-a706-35eb088e69f9","cardType":"basic","points":2,"front":"How can a trade union raise wages above the competitive level?","back":"It acts as a monopoly seller of labour and uses collective bargaining.","mcqOptions":[{"text":"It acts as a monopoly seller of labour and uses collective bargaining.","correct":true,"explanation":"By representing many workers together, the union becomes a single seller of labour and can use collective bargaining to negotiate a wage above the competitive level."},{"text":"It acts as a monopoly buyer of labour and uses individual bargaining.","correct":false,"explanation":"A monopsony is a single buyer, usually an employer. A union represents labour sellers, acting as a monopoly seller and bargaining collectively to raise wages."},{"text":"It acts as a competitive seller of labour and accepts the market wage.","correct":false,"explanation":"Competitive labour sellers have little individual influence over wages. Collective union action instead gives workers monopoly selling power and bargaining strength."},{"text":"It acts as a monopoly seller of goods and uses price controls.","correct":false,"explanation":"The relevant market is the labour market, where the union represents sellers of labour. Product-market monopoly and price controls do not explain higher union wages."}]},{"id":"6fda279a-4cfe-4be5-9c5f-c3ad44431fd4","cardType":"basic","points":2,"front":"What happens to employment when a union raises wages in a competitive labour market?","back":"Employment falls because firms move up their labour demand curve.","mcqOptions":[{"text":"Employment falls because firms move up their labour demand curve.","correct":true,"explanation":"A higher union wage raises firms’ labour costs. Along a downward-sloping labour demand curve, firms respond by demanding fewer workers."},{"text":"Employment rises because firms move down their labour demand curve.","correct":false,"explanation":"A wage rise makes labour more expensive, so firms move up, rather than down, their labour demand curve and employ fewer workers."},{"text":"Employment stays constant because firms move along their labour supply curve.","correct":false,"explanation":"Firms respond to wage changes using their labour demand curve, not the labour supply curve. A higher wage reduces the quantity of labour demanded."},{"text":"Employment falls because workers move down their labour supply curve.","correct":false,"explanation":"The employment reduction is caused by firms demanding less labour as wages rise. Workers’ movement along labour supply does not explain firms’ hiring decision."}]},{"id":"b898167c-7235-4826-baf4-0511ca80ce6b","cardType":"basic","points":2,"front":"Why does a higher union wage create excess supply in a competitive labour market?","back":"

Firms demand fewer workers.
More workers are willing to work, creating a queue of applicants.

","mcqOptions":[{"text":"

Firms demand fewer workers.
More workers are willing to work, creating a queue of applicants.

","correct":true,"explanation":"The higher wage reduces firms’ quantity of labour demanded while increasing workers’ quantity supplied, so willing workers exceed available jobs and a queue forms."},{"text":"

Firms demand more workers.
Fewer workers are willing to work, creating a shortage of applicants.

","correct":false,"explanation":"This reverses both market responses. A higher wage usually makes firms demand fewer workers and encourages more workers to offer their labour."},{"text":"

Firms demand fewer workers.
Fewer workers are willing to work, creating a shortage of applicants.

","correct":false,"explanation":"Although firms demand fewer workers, a higher wage increases workers’ willingness to work. The result is excess supply and a queue, not a shortage."},{"text":"

Firms demand more workers.
More workers are willing to work, creating a queue of applicants.

","correct":false,"explanation":"More workers may be willing to work, but firms demand fewer workers when the wage rises. The excess supply comes from this mismatch."}]},{"id":"640396ec-fcfd-45ae-a54b-a47607c14f00","cardType":"basic","points":2,"front":"How can a union affect wages and employment against a monopsony?","back":"It can raise both the wage and employment towards their competitive levels.","mcqOptions":[{"text":"It can raise both the wage and employment towards their competitive levels.","correct":true,"explanation":"A monopsony restricts employment and pays below the competitive outcome. A union wage can reduce that power, raising both pay and employment towards competitive levels."},{"text":"It can raise the wage but reduce employment below the monopsony level.","correct":false,"explanation":"A moderate union wage can increase employment by removing the monopsonist’s incentive to restrict hiring. Employment falls only if the union wage is pushed too high."},{"text":"It can reduce both the wage and employment towards their competitive levels.","correct":false,"explanation":"Monopsony outcomes are already below competitive wages and employment. Union bargaining tends to raise both towards, rather than reduce them from, competitive levels."},{"text":"It can raise employment but reduce the wage below the monopsony level.","correct":false,"explanation":"A union wage floor raises workers’ pay by definition. It may also increase employment against monopsony, but it cannot reduce the wage below the existing monopsony wage."}]},{"id":"65eced4d-9a03-45ab-9953-5006df7a4168","cardType":"basic","points":2,"front":"Why can a union offset a monopsonist's power?","back":"A union can prevent the employer from keeping wages and employment below competitive levels.","mcqOptions":[{"text":"A union can prevent the employer from keeping wages and employment below competitive levels.","correct":true,"explanation":"Collective bargaining counteracts the monopsonist’s buyer power, preventing the employer from suppressing pay and hiring below the competitive outcome."},{"text":"A union can force the employer to keep wages and employment below competitive levels.","correct":false,"explanation":"That describes the monopsonist’s power, not the union’s purpose. Union bargaining challenges suppressed wages and employment by raising them towards competitive levels."},{"text":"A union can prevent workers from supplying labour above competitive levels.","correct":false,"explanation":"The union’s influence comes from collective bargaining with the employer, not from restricting labour supply. It counters the employer’s ability to suppress wages and employment."},{"text":"A union can guarantee that wages and employment remain exactly at competitive levels.","correct":false,"explanation":"A union can push outcomes towards competitive levels, but bargaining may set wages above that point and then reduce employment."}]},{"id":"c7eee294-7292-4dd6-9b21-f07a2220c485","cardType":"basic","points":2,"front":"What happens if a union pushes a monopsony wage above the competitive wage?","back":"Employment falls as the firm moves up its labour demand curve.","mcqOptions":[{"text":"Employment falls as the firm moves up its labour demand curve.","correct":true,"explanation":"Once the union wage exceeds the competitive wage, labour becomes more expensive than at the competitive outcome. The firm therefore moves up its demand curve and hires fewer workers."},{"text":"Employment rises as the firm moves down its labour demand curve.","correct":false,"explanation":"A higher wage does not move the firm down its demand curve. It moves the firm up the downward-sloping curve, reducing employment."},{"text":"Employment stays constant as the firm moves along its labour supply curve.","correct":false,"explanation":"The firm’s hiring response is determined by labour demand. At a wage above the competitive level, it demands fewer workers, so employment falls."},{"text":"Employment falls as the firm moves down its labour demand curve.","correct":false,"explanation":"The fall in employment is correct, but the direction is wrong. A higher wage moves the firm up its labour demand curve."}]},{"id":"3117b582-126a-4783-8f18-75fa0b89de83","cardType":"basic","points":2,"front":"How does the elasticity of labour demand affect the employment impact of a union wage rise?","back":"The more inelastic labour demand is, the smaller the job loss.","mcqOptions":[{"text":"The more inelastic labour demand is, the smaller the job loss.","correct":true,"explanation":"With inelastic labour demand, firms reduce employment by only a small percentage when wages rise, so a union wage increase causes a smaller job loss."},{"text":"The more elastic labour demand is, the smaller the job loss.","correct":false,"explanation":"Elastic labour demand means employment responds strongly to wage changes. Therefore, a union wage rise causes a larger, not smaller, reduction in employment."},{"text":"The more inelastic labour supply is, the smaller the job loss.","correct":false,"explanation":"The relevant elasticity is labour demand because firms decide how many workers to hire. Inelastic demand limits the employment response to a wage rise."},{"text":"The more elastic labour demand is, the greater the wage rise.","correct":false,"explanation":"Elasticity determines the employment response to a wage rise, not necessarily the size of the union’s negotiated wage increase. Elastic demand generally creates a larger job loss."}]},{"id":"dcd0cd00-b1d4-4768-898c-53437e872820","cardType":"basic","points":2,"front":"Name two factors that affect trade union bargaining power.","back":"

Membership density
The legal framework

","mcqOptions":[{"text":"

Membership density
The legal framework

","correct":true,"explanation":"High membership density gives a union broader representation and bargaining strength. The legal framework determines the rights and restrictions governing union action."},{"text":"

Product advertising
The exchange rate

","correct":false,"explanation":"These factors may affect firms and international trade, but they do not directly determine union bargaining power. Membership density and labour law are relevant factors."},{"text":"

Interest rates
The weather forecast

","correct":false,"explanation":"Neither factor establishes how much influence a union has in wage negotiations. Bargaining power depends on representation and the legal rules governing unions."},{"text":"

Market share
The price level

","correct":false,"explanation":"Market share concerns firms’ product-market position, while the price level concerns the general economy. Union power is affected by membership density and the legal framework."}]},{"id":"56af1c17-2302-4331-8408-0ce25238b621","cardType":"basic","points":2,"front":"How does a firm's profitability affect union wage negotiations?","back":"A more profitable firm can concede more to the union.","mcqOptions":[{"text":"A more profitable firm can concede more to the union.","correct":true,"explanation":"Higher profitability gives a firm greater ability to afford wage increases without threatening viability, so it can concede more during union negotiations."},{"text":"A more profitable firm can concede less to the union.","correct":false,"explanation":"Greater profitability generally increases the firm’s capacity to absorb higher labour costs. This makes it more able, rather than less able, to concede."},{"text":"A more profitable firm must concede everything to the union.","correct":false,"explanation":"Profitability increases the scope for concessions but does not remove the firm’s negotiating power or require complete acceptance of union demands."},{"text":"A more profitable firm can concede more workers to the union.","correct":false,"explanation":"The negotiation concerns wages and employment conditions, not transferring ownership of workers. Profitability affects how much higher pay the firm can afford."}]},{"id":"3675b025-795a-419a-afd3-68c09c1e6c42","cardType":"basic","points":1,"front":"In the retail example, what happened when the wage rose from $£11$/hour to $£13$/hour?","back":"Employment fell from 2,000 to 1,700 assistants.","mcqOptions":[{"text":"Employment fell from 2,000 to 1,700 assistants.","correct":true,"explanation":"The wage increase from £11 per hour to £13 per hour raised labour costs, so firms reduced employment from 2,000 to 1,700 assistants."},{"text":"Employment fell from 2,000 to 1,500 assistants.","correct":false,"explanation":"This overstates the job loss by 200 assistants. The example shows employment falling by 300, from 2,000 assistants to 1,700."},{"text":"Employment rose from 2,000 to 2,300 assistants.","correct":false,"explanation":"A higher wage causes firms to move up their downward-sloping labour demand curve. The example therefore shows employment falling to 1,700, not rising."},{"text":"Employment fell from 1,700 to 2,000 assistants.","correct":false,"explanation":"This reverses the direction of the change. The wage rose from £11 to £13 per hour, and employment fell from 2,000 to 1,700 assistants."}]},{"id":"0abb8583-0bde-4534-a780-f4240f3533e7","cardType":"basic","points":1,"front":"In the retail example, how large was the excess supply of labour at $£13$/hour?","back":"500 workers were seeking jobs beyond the 1,700 jobs firms wanted.","mcqOptions":[{"text":"500 workers were seeking jobs beyond the 1,700 jobs firms wanted.","correct":true,"explanation":"At £13 per hour, firms wanted 1,700 assistants while 2,200 workers sought jobs. The excess supply was therefore 500 workers."},{"text":"300 workers were seeking jobs beyond the 1,700 jobs firms wanted.","correct":false,"explanation":"The 300 figure is the fall in employment from 2,000 to 1,700, not the excess supply. Excess supply compares workers seeking jobs with vacancies available."},{"text":"500 workers were seeking jobs beyond the 2,200 jobs firms wanted.","correct":false,"explanation":"The 500-worker excess is correct only when firms’ demand is 1,700 jobs. Firms did not want 2,200 jobs at £13 per hour."},{"text":"700 workers were seeking jobs beyond the 1,700 jobs firms wanted.","correct":false,"explanation":"The example implies 2,200 workers seeking jobs and 1,700 jobs demanded, giving a difference of 500 rather than 700 workers."}]},{"id":"6dbccbf8-2b86-44ec-ac78-5b67b2e8f125","cardType":"basic","points":2,"front":"In the delivery-driver example, why did employment rise when the wage floor reached $£12$/hour?","back":"The floor removed the monopsonist's incentive to restrict hiring, so employment rose to 340 drivers.","mcqOptions":[{"text":"The floor removed the monopsonist's incentive to restrict hiring, so employment rose to 340 drivers.","correct":true,"explanation":"A suitable wage floor limits monopsony wage-setting power. It makes additional hiring less costly at the margin, allowing employment to rise to the competitive level of 340 drivers."},{"text":"The floor increased the monopsonist's incentive to restrict hiring, so employment fell to 240 drivers.","correct":false,"explanation":"A suitable wage floor reduces the monopsonist’s incentive to restrict hiring rather than increasing it. Employment consequently rose to 340 drivers in the example."},{"text":"The floor removed the monopsonist's incentive to restrict hiring, so employment rose to 440 drivers.","correct":false,"explanation":"The mechanism is correct, but the stated employment level is too high. The delivery-driver example gives a competitive employment level of 340 drivers."},{"text":"The floor removed the monopsonist's incentive to restrict hiring, so employment fell to 340 drivers.","correct":false,"explanation":"Removing the incentive to restrict hiring causes employment to rise, not fall. The wage floor increased employment to 340 drivers."}]},{"id":"165ac247-d011-4fad-806d-2f6be366e751","cardType":"basic","points":1,"front":"What was the effect of the $£14$/hour union wage in the delivery-driver example?","back":"Employment fell below the competitive level of 340 drivers.","mcqOptions":[{"text":"Employment fell below the competitive level of 340 drivers.","correct":true,"explanation":"A £14 union wage exceeds the competitive wage in the example. Firms therefore move up their labour demand curve and hire fewer than the competitive 340 drivers."},{"text":"Employment rose above the competitive level of 340 drivers.","correct":false,"explanation":"A wage above the competitive level makes labour more costly and reduces firms’ labour demand. Employment therefore falls below 340 drivers."},{"text":"Employment stayed at the competitive level of 340 drivers.","correct":false,"explanation":"Employment can reach the competitive level only while the union wage is suitable. Pushing the wage above that level causes employment to fall below 340 drivers."},{"text":"Employment fell below the competitive level of 240 drivers.","correct":false,"explanation":"The direction of the effect is right, but the competitive benchmark is 340 drivers, not 240. The £14 wage reduced employment below 340."}]},{"id":"1786b08c-3983-4fbd-aed4-eb8adaa8a7e5","cardType":"cloze","points":null,"front":"In a competitive labour market, a union wage above equilibrium reduces [ ].","back":"In a competitive labour market, a union wage above equilibrium reduces employment.","mcqOptions":[{"text":"employment","correct":true,"explanation":"A union wage above equilibrium raises the price of labour above the market-clearing level. Firms demand fewer workers, so employment is reduced."},{"text":"wages","correct":false,"explanation":"The union wage is above equilibrium, so wages have increased rather than been reduced. The resulting reduction is in employment because firms demand less labour."},{"text":"labour supply","correct":false,"explanation":"A higher wage generally increases the quantity of labour supplied, rather than reducing labour supply. The competitive-market effect is a reduction in employment demanded."},{"text":"productivity","correct":false,"explanation":"The statement concerns the labour-market quantity hired at a wage above equilibrium, not workers’ productivity. Firms reduce employment because labour has become more expensive."}]},{"id":"1a34c1e7-387d-4450-8fbb-698fb053064b","cardType":"cloze","points":null,"front":"Against a monopsony, a union wage up to the competitive level can raise both wages and [ ].","back":"Against a monopsony, a union wage up to the competitive level can raise both wages and employment.","mcqOptions":[{"text":"employment","correct":true,"explanation":"A union wage up to the competitive level can reduce monopsony power. The employer then has less incentive to restrict hiring, so employment rises alongside wages."},{"text":"unemployment","correct":false,"explanation":"Against a monopsony, a suitable union wage can increase hiring rather than directly raise unemployment. The relevant outcome that rises towards competition is employment."},{"text":"profits","correct":false,"explanation":"The card describes changes in labour-market outcomes, specifically wages and the number of workers hired. A union wage may affect profits, but employment is the paired result."},{"text":"labour costs","correct":false,"explanation":"A union wage does raise the firm’s labour costs, but the sentence asks for the second labour-market outcome that can rise towards its competitive level: employment."}]},{"id":"afbff63d-370c-4f9c-ac92-9cf8826dd70e","cardType":"cloze","points":null,"front":"The more inelastic labour demand is, the smaller the [ ] from a union wage rise.","back":"The more inelastic labour demand is, the smaller the job loss from a union wage rise.","mcqOptions":[{"text":"job loss","correct":true,"explanation":"Inelastic labour demand means employment responds relatively little when wages rise, so fewer jobs are lost than when labour demand is elastic."},{"text":"wage loss","correct":false,"explanation":"A union wage rise increases workers’ pay rather than causing a wage loss. The relevant consequence is job loss, which is smaller when labour demand is inelastic."},{"text":"employment gain","correct":false,"explanation":"A higher union wage generally reduces the quantity of labour demanded, so employment does not gain. Inelastic demand means the resulting job loss is relatively small."},{"text":"profit loss","correct":false,"explanation":"A union wage rise may reduce firms’ profits, but the labour-market effect being measured is job loss. Inelastic labour demand limits the number of jobs lost."}]},{"id":"794325ed-e218-47f2-b358-b7cf2af6413c","cardType":"cloze","points":null,"front":"In the retail example, the union wage rise from $£11$/hour to $£13$/hour was an [ ] rise.","back":"In the retail example, the union wage rise from $£11$/hour to $£13$/hour was an 18% rise.","mcqOptions":[{"text":"18%","correct":true,"explanation":"The increase is £2 on an original wage of £11: £2 ÷ £11 × 100 = 18.18%, which is stated as an 18% rise."},{"text":"20%","correct":false,"explanation":"This is a tempting rounded estimate, but it treats the £2 increase as one-fifth without using the original £11 wage precisely. The stated rise is 18%."},{"text":"22%","correct":false,"explanation":"This results from dividing the £2 increase by the new £13 wage rather than the original £11 wage. Percentage changes use the starting value, giving an 18% rise."},{"text":"15%","correct":false,"explanation":"This understates the percentage increase, possibly by confusing the wage change with the employment percentage change in the example. Comparing £2 with the original £11 gives an 18% rise."}]},{"id":"72c6fdca-bf26-4c8b-bb43-2bfef139c975","cardType":"cloze","points":null,"front":"In the retail example, employment fell by 300 jobs, equal to a [ ] fall.","back":"In the retail example, employment fell by 300 jobs, equal to a 15% fall.","mcqOptions":[{"text":"15%","correct":true,"explanation":"The 300-job reduction represents 15% of the original 2,000 jobs: 300 ÷ 2,000 × 100 = 15%."},{"text":"10%","correct":false,"explanation":"A 10% fall would represent only 200 jobs out of the original 2,000. The actual reduction is 300 jobs, so employment fell by 15%."},{"text":"12.5%","correct":false,"explanation":"This percentage would result from using an incorrect base of 2,400 jobs. The original employment was 2,000, making 300 fewer jobs equal to a 15% fall."},{"text":"18%","correct":false,"explanation":"This confuses the employment change with the percentage increase in the union wage. Employment fell by 300 out of 2,000 jobs, which equals 15%."}]},{"id":"03b93333-7712-46e4-90ea-d2fe58886ad7","cardType":"cloze","points":null,"front":"In a monopsony diagram, the wage without a union is read from the supply curve at the employment where [ ].","back":"In a monopsony diagram, the wage without a union is read from the supply curve at the employment where MCL meets MRP.","mcqOptions":[{"text":"MCL meets MRP","correct":true,"explanation":"A monopsony chooses employment where marginal cost of labour equals marginal revenue product. The wage is then read from the supply curve at that employment level."},{"text":"ACL meets MRP","correct":false,"explanation":"Average cost of labour does not determine the monopsonist’s profit-maximising employment. Employment is set where MCL meets MRP, and the wage is read from the supply curve there."},{"text":"MCL meets ARP","correct":false,"explanation":"The relevant comparison is marginal rather than average revenue product because the firm considers the extra revenue from one more worker. Thus employment is chosen where MCL meets MRP."},{"text":"MRP meets supply","correct":false,"explanation":"The supply curve determines the wage after the employment decision, rather than choosing employment directly in the monopsony model. Employment is selected where MCL meets MRP."}]}]}],"examCountdown":{"examDate":"2027-05-10","paperLabel":"Paper 1"},"heading":"1.6.5 The Influence of trade unions in determining wages and levels of employment","title":"1.6.5 The Influence of trade unions in determining wages and levels of employment Flashcards","topbar":{"backHref":"/a-level/economics/aqa/flashcards"},"topicSidebar":"$L39"}]}],"topicId":"7a48124f-0f41-544d-bb91-658294b5408c","walled":"$L3a"}],"$L3b","$L3c"]