If labor is 80 percent of total costs in industry A and 20 percent in industry B, then other things equal, we would expect the elasticity of demand for labor to be

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Industries with higher labor costs tend to have a higher elasticity of demand for labor. This is because the higher the labor cost, the greater the impact on the cost of production when there is a change in the wage rate. Therefore, we would expect the elasticity of demand for labor to be greater in industry A than in industry B.

If Labor Is 80 Percent of Total Costs in Industry