The demand for labor would most likely become less inelastic as a result of
A) a decrease in the elasticity of the demand for the product that the labor produces.
B) a decrease in the time for employers to make technological changes or purchase new equipment.
C) a decrease in the proportion of labor costs to total costs.
D) an increase in the proportion of labor cost to total costs.

Question

Quizplus · Accepted Answer

An increase in the proportion of labor cost to total costs makes labor demand more elastic because changes in wages have a larger impact on total costs, prompting employers to be more responsive to wage changes.

The Demand for Labor Would Most Likely Become Less Inelastic