The elasticity of demand for labor will be more elastic in the _____ if labor's share of total production costs is _____.

Question

Quizplus · Accepted Answer

In the long run, firms have more flexibility to adjust all inputs in response to changes in wages. If labor's share of total production costs is large, a change in the wage rate will have a significant impact on total costs, making the demand for labor more elastic as firms seek alternatives or adjust production methods.

The Elasticity of Demand for Labor Will Be More Elastic