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Economics
- Thread starter sourgho16
- Start date
- Messages
- 350
- Reaction score
- 64
- Points
- 38
Since the negotiated wage is OW if the firm tries to pay less than the negotiated wage rate, the trade union may go into, e.g a strike. Therefore the firm will not be able to lower wages and the supply curve HKN below line WX will no longer exist. The part of supply curve above the line WX will be as it is. To hire more workers the firm will need to increase wages. The effect of this is a new supply curve that is horizontal up to the point where it meets the original supply curve. Thus the new supply curve is WKN
- Messages
- 17
- Reaction score
- 0
- Points
- 11
the minimum supply is at wage W, therefore any labor which was taking less then W has now a perfectly elastic supply curve up to the point where the labor was taking wage W. The labor, which was initially, taking wages above OW will remain unchanged. Therefore, the supply curve will be WKN. 
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Good Luck,
From,
www.highgrades.weebly.com