00:01
So here we're thinking about unions, but i'm going to try to actually just start off by drawing a market for labor.
00:07
So a market for labor is usually workers and a wage.
00:12
And we have a downward sloping demand and an upward sloping supply.
00:16
Here, remember the supply is workers who are selling time.
00:19
The demand is firms who are hiring workers.
00:22
So in a free market, you would have zero unemployment, right? because the quantity supplied of labor is equal to the quantity demanded.
00:34
There's no excess labor, right? so there is no unemployment with the market.
00:39
But suppose that unions now have power, right? they have power, and that power is in part for legal reasons.
00:46
So one thing they can do is use that power for higher wages.
00:54
Suppose that unions, by dint of their power, can set a higher wage.
00:58
So the union wage is going to be, say, here.
01:03
But at the union wage, the quantity demand and the quantity supplied are now very different...