Asked by AIDAN ECCLESTON on Jul 18, 2024
Verified
Assume that the coefficient of elasticity of product demand is 0.5 in industry A and is 3.2 in industry B. Other things equal, labor demand will be
A) more elastic in industry A than in B.
B) relatively elastic in both industries A and B.
C) more elastic in industry B than in A.
D) relatively inelastic in both industries A and B.
Coefficient of Elasticity
A measure used in economics to quantify how responsive the quantity demanded or supplied of a good is to a change in one of its determinants, such as price.
Labor Demand
The sum total of labor that employers are keen and able to take on at a certain wage level throughout a defined period.
- Identify the influence of product demand elasticity on industry-specific labor demand elasticity.
Verified Answer
RC
Rohith ChemitigantiJul 22, 2024
Final Answer :
C
Explanation :
Labor demand elasticity is directly related to product demand elasticity. Since industry B has a higher product demand elasticity (3.2) compared to industry A (0.5), labor demand will also be more elastic in industry B.
Learning Objectives
- Identify the influence of product demand elasticity on industry-specific labor demand elasticity.
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