Asked by
Dajuan Niver
on Dec 19, 2024
Verified
Other things equal, the relationship between the relative importance of a given type of labor in a firm's total costs and the elasticity of demand for that labor is such that the
A) demand for labor will be elastic only if labor accounts for less than 50 percent of total costs.
B) demand for labor will be elastic only if labor accounts for 50 percent or more of total costs.
C) larger the labor cost to total cost ratio, the smaller will be the elasticity of labor demand.
D) larger the labor cost to total cost ratio, the greater will be the elasticity of labor demand.
Labor Cost
The total expense incurred by employers for wages, salaries, and benefits paid to their employees.
Total Cost Ratio
The sum of all costs, both fixed and variable, associated with producing goods or services, divided by the quantity produced.
Elasticity of Labor Demand
A measure of how the quantity of labor demanded by employers changes in response to a change in wages or salary rates.
- Understand the impact of labor cost proportion on the elasticity of labor demand.
Verified Answer
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Learning Objectives
- Understand the impact of labor cost proportion on the elasticity of labor demand.