Which of the following statements is true?
A)The fewer the substitute factors for union labor, the higher the elasticity of demand for union labor, and the smaller the cutback in union labor for any given wage increase.
B)The fewer the substitute factors for union labor, the lower the elasticity of demand for union labor, and the larger the cutback in union labor for any given wage increase.
C)The more the substitute factors for union labor, the higher the elasticity of demand for union labor, and the smaller the cutback in union labor for any given wage increase.
D)The more the substitute factors for union labor, the higher the elasticity of demand for union labor, and the larger the cutback in union labor for any given wage increase.
E)none of the above

Question

Quizplus · Accepted Answer

When there are more substitute factors for union labor, it means that employers have more alternatives to union labor. This increases the elasticity of demand for union labor because employers can more easily switch to substitutes if the price (wage) of union labor increases. Consequently, for any given wage increase, there would be a larger cutback in the employment of union labor as employers opt for the substitutes.

Which of the Following Statements Is True