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United States ranks by far the lowest (because in countries like France and Spain, union negotiations often

determine pay even for nonunion employees).

6. No. While some unions may cause firms to go bankrupt, other unions help firms to become more

competitive. No overall pattern exists.

7. From a social point of view, the benefits of unions and the costs seem to counterbalance. There is no

evidence that in countries with a higher percentage of unionized workers, the economies grow more or

less slowly.

8. a. The marginal cost of labor is the cost to the firm of hiring one more worker. To find the marginal cost

of labor, one must divide the change in wage by the change in labor.

b. Because the monopsonist is the sole employer in the labor market, it can offer any wage that it wishes.

However, the marginal cost of labor will be greater than the wage for any number of workers more
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