If the demand for a certain type of labor is price elastic, a(n) _______ in its price (wage) will, all other things unchanged, _______ the quantity of that type of labor demanded by a _______ percentage than the percentage increase in price.
A) decrease; reduce; greater
B) increase; reduce; greater
C) decrease; increase; smaller
D) increase; increase; smaller

Question

Quizplus · Accepted Answer

If the demand for a certain type of labor is price elastic, an increase in its price (wage) will, all other things unchanged, reduce the quantity of that type of labor demanded by a greater percentage than the percentage increase in price. This is because when the price of labor increases, firms will look for substitutes or alternative methods to produce their goods or services, which in turn will result in a larger reduction in the quantity of labor demanded. Therefore, option B is the correct choice.

If the Demand for a Certain Type of Labor Is