Suppose that a union successfully negotiated a 10 percent wage increase and the quantity of labor demanded increased by 10 percent. We can conclude that
A) the labor demand curve must have independently shifted to the right.
B) labor demand is highly elastic.
C) the coefficient of labor demand elasticity is less than 1.
D) labor demand is unit-elastic.

Question

Quizplus · Accepted Answer

The increase in both wages and quantity of labor demanded suggests that the labor demand curve shifted to the right, as typically, an increase in wages would lead to a decrease in quantity demanded if the demand curve remained unchanged.

Suppose That a Union Successfully Negotiated a 10 Percent Wage