1) If the wage elasticity of demand for professors is -0.5, then an increase in
ID: 1179341 • Letter: 1
Question
1) If the wage elasticity of demand for professors is -0.5, then an increase in the wage of professors from $45,000 to $55,000 will cause the quantity demanded to fall by how many percentage?
2) If the quantity of auto workers demanded decreases from 66000 to 54000 when the equilibrium wage increases from $12 per hour to $14 per hour, then the wage elasticity of demand for these workers is elastic or inelastic?
3) If the absolute elasticity of labor demand is 2.0, then an eight percent increase in the wage will decrease employment by how many percentage?
4) If the quantity of steel workers demanded falls from 30000 to 20000 when the equilibrium wage increases from $9 per hour to $11 per hour, then the wage elasticity of demand for these workers is?
Explanation / Answer
Answer 1) (10000/45000)*0.5=11.11% = Answer
Answer 2) |Elasticity| = -{(54000-66000)/66000}/{(14-12)12} = 0.7273 which is less than 1. Hence it is inelastic= Answer
Answer 3) 8%*2 = 16% decrease in demand = Answer
Answer 4) elasticity = {(20000-30000)/30000}/{(11-9)/9} = -1.5 = Answer
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