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Over the past decade, there have been major strikes and demonstrations by fast food workers in cities across the United States, many of them financed by the Service Employees International Union (SEIU). Using the analytics of Marshall’s Rules of Derived Demand, discuss whether or not unionizing fast food workers is likely to be successful. (Where successful means higher wages with little employment loss.) I will inform you that previous studies have found that consumers of fast food are quite responsive to price changes (A recent meta analysis found that the elasticity of demand estimate for “food away from home” is quite high—on the order of 0.8. Intuitively this makes sense as there are many substitutes for fast-food that would suggest a high demand elasticity for products in this industry.) If you do not know a relevant piece of information make an educated guess or state what would be the ideal case for fast food workers. Be sure to discuss all 4 elements that determine the elasticity of demand.
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