The elasticity of demand for labor is 2.16. It follows that if the

Question

Quizplus · Accepted Answer

The elasticity of demand for labor is the percentage change in the quantity demanded of labor divided by the percentage change in the wage rate. In this case, the elasticity is 2.16, which means that a 1% increase in the wage rate leads to a 2.16% decrease in the quantity of labor demanded. Conversely, a 1% decrease in the wage rate leads to a 2.16% increase in the quantity of labor demanded. Therefore, a 10% increase in the wage rate would lead to a 21.6% decrease in the quantity of labor demanded, and a 10% decrease in the wage rate would lead to a 21.6% increase in the quantity of labor demanded. Thus, option C is the correct answer.

The Elasticity of Demand for Labor Is 2