Under which circumstance can unions enhance efficiency?

Show Answers

Increase wages for current employees beyond the competitive market rateReduce wages for non-unionized local workersCounterbalance the market dominance of a major employer in the areaMake strike threats without actually initiating work stoppages

Explanation

Unions can improve efficiency when they neutralize the market power of a dominant employer in a region, helping to create a more balanced labor market. Simply raising wages above equilibrium or lowering outsider wages does not necessarily lead to efficiency gains. Likewise, threatening strikes without action does not affect overall efficiency.