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Chapter 29: Q. 29-5 (page 665)

Explain why, in economic terms, the total income of union membership is maximized when marginal revenue is zero. (Hint: How much more revenue is forthcoming when marginal revenue is equal to zero?')

Short Answer

Expert verified

The union membership is thus maximised at the level of zero marginal revenue.

Step by step solution

01

 Introduction

  • There is no addition to total revenue when the marginal revenue is zero, the total income cannot be maximised.
  • If the marginal revenue is zero, the total revenue remains unchanged.
02

 Explanation

  • Extra revenue cannot be obtained at the level of zero marginal revenue. The overall income of the union membership is thus maximised at the level of zero marginal revenue.

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Most popular questions from this chapter

The Writers Guild of America (WGA), which represents TV and film screenwriters, called for a strike, and most screenwriters stopped working. Nevertheless, writers for certain TV soap operas, such as the Young and the Restless-which have had shrinking audiences for years, draw small numbers of viewers for repeat shows, and rarely sell on Blu-ray discs-opted to drop their WGA memberships and tried to continue working during the strike. Why do you suppose that the WGA posted on its Web site a phone number for union members to report "strike-breaking activities and 'scab writing" "o the union's 12-person Strike Rules Compliance Committee? What effect do strikebreakers have on the collective bargaining power of a union?

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Use this information to answer the following questions.

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b. What hourly wage rate will this firm pay its workers?

c. What is the total amount of wage payments that this firm will make to its workers each hour?

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