The elasticity of resource demand measures the
A) responsiveness of workers to changes in wage rates.
B) responsiveness of producers to changes in resource prices.
C) ratio of marginal revenue product to resource price.
D) sensitivity of marginal revenue product to changes in product price.

Question

Quizplus · Accepted Answer

The elasticity of resource demand measures the responsiveness of producers to changes in resource prices. It indicates how much the demand for a resource will change when its price changes. Option A is measuring the elasticity of labor demand, not resource demand. Option C refers to the marginal productivity theory of income distribution, which is not related to elasticity of resource demand. Option D is referring to the elasticity of demand for the final product, not resource demand.

The Elasticity of Resource Demand Measures the