Suppose the Federal Government Allows Labor Unions to Act as the Sole

Multiple Choice

Suppose the federal government allows labor unions to act as the sole seller in labor markets, but the government collects an annual $10,000,000 "administrative fee" from each union in this situation. Assuming this fee is not so large that it forces the unions to disband, what is the impact of this fee on the equilibrium wage and employment level in the monopolized labor market?

A) Wages and employment decline.
B) Wages increase and employment declines.
C) Employment increases and wages decline.
D) No change in wages or employment levels.