Suppose a Labor Market Has Perfectly Inelastic Supply That Is

Multiple Choice

Suppose a labor market has perfectly inelastic supply that is composed of union and non-union workers, and there is wage discrimination in the union and nonunion sectors. If the union shifts its policy from maximizing total economic rents to maximizing total wages earned by members, what happens to the equilibrium employment level and wage for non-union workers?

A) Both increase.
B) Employment increases and wage declines.
C) Wage increases and employment declines.
D) Both decline.