Suppose the firm's labor demand curve is given by:
w = 20 - 0.01E,
where w is the hourly wage and E is the level of employment. Suppose also that the union's utility function is given by
U = w ( E.
It is easy to show that the marginal utility of the wage for the union is E and the marginal utility of employment is w. What wage would a monopoly union demand? How many workers will be employed under the union contract?