Determine if the following items will make demand for labor more or less elastic
ID: 1118781 • Letter: D
Question
Determine if the following items will make demand for labor more or less elastic, and sort them appropriately. Suggest More Elastic Demand: Suggest More Inelastic Demand: The firm can switch between usingThe firm's output The firm's production process exhibits a low degree of input substitutability abor and capital relatively easily. exhibits elastic demand. Labor costs are a relatively large share of the total cost of production. The firm sells a product which has few substitutes and is therefore able to charge higher prices without losing too many customers The firm's production process is capital intensive and requires extensive use of expensive machinery.Explanation / Answer
Ans:
we will evaluate the demand for labor is elastic or inelastic under each situation considering the effect it will have on the demand for labor under each situation.
The firm can switch between using labor and capital relatively easily.
The firms output exhibits elastic demand
Labor cost are a relatively large share of the total cost of production.
The firms production process exhibits a low degree of input substititability.
The firms production process is capital intensive and requires extensive use of expensive machinery.
The firm sells a product which has few substitutes and therefore able to charge higher prices with out losing too many customers.
More Elastic Demand More inelastic DemandThe firm can switch between using labor and capital relatively easily.
The firms output exhibits elastic demand
Labor cost are a relatively large share of the total cost of production.
The firms production process exhibits a low degree of input substititability.
The firms production process is capital intensive and requires extensive use of expensive machinery.
The firm sells a product which has few substitutes and therefore able to charge higher prices with out losing too many customers.
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