Suppose that a union successfully negotiated a 10 percent wage increase and the quantity of labor demanded decreased by 10 percent. Given a fixed labor demand curve, we can conclude that
A) the labor demand curve is upsloping.
B) labor demand is elastic.
C) labor demand is unit-elastic.
D) the coefficient of elasticity of labor demand is less than 1.

Question

Quizplus · Accepted Answer

The labor demand is unit-elastic because the percentage change in quantity demanded (10%) is equal to the percentage change in wage (10%), resulting in an elasticity coefficient of 1.

Suppose That a Union Successfully Negotiated a 10 Percent Wage