Suppose that a union successfully negotiated a 10 percent wage increase and the quantity of labor demanded increased by 10 percent. We can conclude that
A)the labor demand curve must have independently shifted to the right.
B)labor demand is highly elastic.
C)the coefficient of labor demand elasticity is less than 1.
D)labor demand is unit-elastic.

Question

Quizplus · Accepted Answer

The increase in both wage and quantity of labor demanded suggests that the labor demand curve shifted to the right, as typically, higher wages would decrease the quantity of labor demanded unless there is an increase in demand.

Suppose That a Union Successfully Negotiated a 10 Percent Wage