O Levels Economics (2281)•2281/11/M/J/18

Explanation
Union bargaining power rises with tight labor markets Steps:
- Trade unions gain wage bargaining power when labor demand exceeds supply, making workers scarcer.
- Increasing output signals higher production needs, boosting employer demand for labor.
- This tightens the labor market, giving unions leverage to demand higher wages without replacement threats.
- Conversely, factors increasing labor availability dilute this power.
Why B is correct:
- In labor economics, rising output shifts the labor demand curve rightward (per the demand-supply model), reducing unemployment and enhancing unions' ability to secure wage hikes.
Why the others are wrong:
- A: Rising labor supply shifts the supply curve right, flooding the market and weakening unions' negotiating position.
- C: Rising unemployment signals excess labor supply, making it easier for employers to resist wage demands.
- D: Rising imports heighten foreign competition, reducing domestic labor demand and undermining union influence.
Final answer: B
Topic: Trade unions
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