If steel workers obtain a substantial wage increase, employment in the steel industry will be likely to fall the most if
A) the demand curve for steel is highly inelastic.
B) the demand curve for steel is highly elastic.
C) the demand curve for steel workers is highly inelastic.
D) there are no good substitutes for steel.

Question

Quizplus · Accepted Answer

If the demand for steel is highly elastic, a wage increase for steel workers will result in a significant increase in the cost of producing steel, making it more expensive than other substitutes. As a result, consumers may shift to alternative products, and there will be a decline in demand for steel. In turn, the steel industry will reduce its output, and employment levels will fall.

If Steel Workers Obtain a Substantial Wage Increase, Employment in the Steel