a) if the price elasticity of demand for labor is 0.1 and the wage increased from...
a) if the price elasticity of demand for labor is 0.1 and the wage increased from $10 to $15 an hour, what is the predicted decrease in the level of employment in percentage terms?
Instructions : Enter your response as a whole number.
B) if the price elasticity of demand for labor is 0.2 and the wage increased from $10 to $15 an hour, what is the predicted decrease in the level of employment in percentage terms?
Instructions: around your response to one decimal place.
Homework Answers
Elasticity of demand for labor = % Change in Demand for Labor/ % Change in wage
Elasticity of demand for labor = 0.1
% Change in wage = (15-10)/10*100 = 50%
Elasticity of demand for labor = % Change in Demand for Labor/ % Change in wage
0.1 = % Change in Demand for Labor/50
% Change in Demand for Labor = 50*0.1 = 5 Percent
Elasticity of demand for labor = % Change in Demand for Labor/ % Change in wage
Elasticity of demand for labor = 0.2
% Change in wage = (15-10)/10*100 = 50%
Elasticity of demand for labor = % Change in Demand for Labor/ % Change in wage
0.2 = % Change in Demand for Labor/50
% Change in Demand for Labor = 50*0.2 = 10 Percent
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