Which of the following will lead to a relatively inelastic industry demand for labor?
A)An increase in the use of the fixed input
B)An increase in the wage rate
C)A relatively inelastic demand for the output
D)A reduction in the price of output

Question

Quizplus · Accepted Answer

A relatively inelastic demand for the output means that the quantity demanded of the output is not very responsive to changes in price. This implies that firms in the industry have limited ability to adjust the quantity of output produced in response to changes in the wage rate or other input costs. Therefore, a change in the wage rate is unlikely to have a substantial impact on the industry's demand for labor, making it relatively inelastic. An increase in the use of the fixed input (A) or a reduction in the price of output (D) could potentially affect the industry's demand for labor, but these factors do not necessarily lead to a more or less elastic demand curve for labor.

Which of the Following Will Lead to a Relatively Inelastic