Attempts: Average: 12 8. Effect of substitutes on the demand for labor The year

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Attempts: Average: 12 8. Effect of substitutes on the demand for labor The year is 2035. In many occupations, robots are replacing humans. As it turns out, robots make very good house cleaners, but very poor guidance counselors. Assuming the other determinants of demand for the two services are roughly similar, you would expect the demand for human guidance counselors to be less elastic than the demand for human house cleaners One factor that affects the elasticity of demand for labor is the elasticity of demand for the product itself. The higher the price elasticity of demand for a product, the higherthe elasticity of demand for labor Grade It Now Save & Continue Continue without saving derived from less elastic than more elastic than higher equal in elasticity to lower

Explanation / Answer

1.In case the substitutes for a product are available,the demand is elastic

If substitutes are not available then demand is inelastic.

Since robots are not good counselor,there is only the option of humans available for counseling Thus demand for himan guidance counsellors will be less elastic

2.The higher the elasticity of demand,the higher the elasticity of demand for labor.

When wage rate rises,the marginal cost of production rises.This raises the price of a product.If demand is elastic,then demand falls to a great extent due to rise in price.The greater the fall in quantity,the greater the fall in the demand for labor-making demand for labor more elastic.

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