Other things being equal, the elasticity of demand for labor will be greater the
A)smaller the proportion of total costs accountable for by labor costs.
B)smaller the elasticity of demand for the product it produces.
C)larger the number of close substitute resources available.
D)more rapid the decline in its marginal productivity.

Question

Quizplus · Accepted Answer

The elasticity of demand for labor will be greater when there are a larger number of close substitute resources available. This is because employers can more easily switch to alternative inputs if the price of labor increases, making the demand for labor more sensitive (elastic) to changes in wage rates.

Other Things Being Equal, the Elasticity of Demand for Labor