Industry Profits Boost Union Bargaining Power

Steps:

• Unions seek wage increases by leveraging factors that raise labor demand or firm ability to pay.
• Assess each option's effect on product demand, labor supply, or industry profitability.
• Higher profits signal firms can absorb wage hikes without reducing output.
• Options weakening demand or increasing supply hinder wage claims.

Why D is correct:

• Increased profits enhance firms' ability to pay higher wages, per labor economics principle that profitability correlates with wage bargaining success.

Why the others are wrong:

• A: Lowers product demand via substitutes, reducing labor demand and wage pressure.
• B: Eases entry into jobs, boosting labor supply and depressing wages.
• C: Raises labor supply, shifting equilibrium toward lower wages.

Final answer: D