1. Assume that an industrial union's primary purpose is to raise the wages of its members above the competitive level.

(a) Explain on a theoretical level how this increase might be accomplished.

(b) What conditions would make the union's job easier?

2. Suppose a frost kills a large portion of an orange crop, with a resulting higher price of oranges. It has been said that such an increase in price benefits no one since it cannot elicit a supply response; the higher price, it is said, simply "lines the pockets of profiteers." Analyze this proposition. (Hint: be sure to focus on the rationing function of market price.)

3. The average wage rate of women is only 59% of that of men. This shows that women are paid just 59% as much as men for doing the same work. Evaluate this statement.

4. What is wrong with this way of thinking?

"Higher wages help everybody. Workers are helped because they can now purchase more of the things they need. Business is helped because the increase in workers' purchasing power will increase the demand for products. Taxpayers are helped because workers will now pay more taxes. Union activities and legislation mandating higher wages for workers will promote economic progress."

5. "Jobs are the key to economic progress. Unless we create more jobs, our standard of living will fall." (True or false? Explain.)