13. [25 points] Consider two hypothetical states that operate under different laws governing labor unions: Winterfell and the Riverlands. The following graph shows the labor market in a state in the Winter'fell: ir: - Subory g 153 g 5' 125 I!- I!- .. , I I !_I5 no I I E e -5 l l g ' I I s: 5,_ I I Demand 3 ' I I I I 25 I l l I C 125 253 375 533 525 '53 3'5 153C LABOR [Thousands of workers; Initially, the market-clearing wage in winterfell is $10.00 per hour. Now, suppose that the General Assembly in this western state passes a law that makes it easier for workers to join a union. Through collective bargaining, the union negotiates an hourly wage of $12.50. a. How many workers are employed at the union wage? [2 points] b. How many are left unemployed? What is the unemployment rate? {6 points) Suppose the legislature in the Riverlands passes strong "right-to-work" laws that make it very difficult for unions to organize workers, so the wage is always equal to the market-clearing value. Assume that with the exception of this difference in legislation, the western and eastern states are extremely similar. The market clearing wage in the Riverlands is the same as the market clearing wage in Winterfell before the labor union negotiated the new, higher wage for workers in the western state. Suppose that after the wage goes up in Winterfell, some workers from Winterfell state lose their jobs and decide to move to the Riverlands for work. c. Draw a graph depicting the labor market that shows what happens to employment and wages in the Riverlands as a result of the migration of workers from Winterfell. [8 points} d. Who is made better off as a result of union action in Winterfell? [4 points) e. Discuss briefly the impact of union action on the employment rate. {5 points] 20.0 17.5 Supply 15.0 12.5 10.0 WAGE (Dollars per hour) 7.5 5.0 Demand 2.5 0 125 250 375 500 625 750 875 1000 LABOR (Thousands of workers)