Question

1. A city can use several different combinations of labor and computers to run its departments. People can fill out information on a paper form or on a computer. Below are three estimates of the mix of labor and computers needed to run a specific department. Computers and software cost $2000 each and must be replaced once a year. In a table below three choices of combinations of labor and computers are listed. Use this set of information to answer the following: (4 points)

1. In a non-unionized labor market, the wage for the workers at this office will be $24,000 per year. Given this wage will choice A, B or C be preferred. Briefly explain.
2. A strong union is started and it manages to raise the wage of workers in this office to $40,000. Given this wage, will choice A, B or C be preferred. Briefly explain.
3. Based on your answer to the first two parts of the question, how has the union affected the number of jobs available?
4. Based on your answer to the first two parts of this question, is there a reason to believe that a union worker will be able to handle more citizens than a nonunion worker was able to handle before the creation of the strong union?

	# of workers	# of computers
Choice A	10	100
Choice B	6	160
Choice C	3	250

Answer 1