The wage rate increases 15 percent,and the quantity demanded of labor falls by 25 percent.The absolute value of the elasticity of demand for labor is

Question

Quizplus · Accepted Answer

The formula for elasticity of labor demand is:
E = (% change in quantity demanded of labor) / (% change in wage rate)
Using the given values, we get:
E = (-25%) / (15%) = -1.67
Since we are looking for the absolute value, the answer is 1.67. Therefore, the correct choice is B.

The Wage Rate Increases 15 Percent,and the Quantity Demanded of Labor