Other things equal, if wage rates increase by 20 percent, the greatest decline in employment will occur when labor costs are a

A) large proportion of total costs and product demand is elastic.
B) small proportion of total costs and product demand is elastic.
C) large proportion of total costs and product demand is inelastic.
D) small proportion of total costs and product demand is inelastic.

Wage Rates

Wage rates refer to the standard amount of compensation offered to employees for their labor services per unit of time or unit of output.

Labor Costs

Expenses associated with compensating the workforce, including wages, salaries, benefits, and related taxes paid by an employer for the work done by employees.

Total Costs

The total of variable and fixed expenses associated with the creation of goods or services.