Question: Question 4 (10 Marks) Although there is no universally accepted model of strike activity, Orle Ashenfelter and George Johnson have developed what is essentially a

Question 4 (10 Marks) Although there is no universally accepted model

Question 4 (10 Marks) Although there is no universally accepted model of strike activity, Orle Ashenfelter and George Johnson have developed what is essentially a "political model of strike activity". (a) Outline the basic features of this model in terms of participating agents and their motivations. (5 marks) (a) Suppose that the union resistance curve is W* = 6 -0.25 and the firms profit function is Profit = 5 + 75 -0.352, where W* = the percentage wage increase and S = the expected strike length in days. Determine the length of the strike and the percentage wage increase. (5 marks) Question 4 (10 Marks) Although there is no universally accepted model of strike activity, Orle Ashenfelter and George Johnson have developed what is essentially a "political model of strike activity". (a) Outline the basic features of this model in terms of participating agents and their motivations. (5 marks) (a) Suppose that the union resistance curve is W* = 6 -0.25 and the firms profit function is Profit = 5 + 75 -0.352, where W* = the percentage wage increase and S = the expected strike length in days. Determine the length of the strike and the percentage wage increase

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