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Microeconomics

13th Edition
Roger A. Arnold
ISBN: 9781337617406

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Microeconomics

13th Edition
Roger A. Arnold
ISBN: 9781337617406
Textbook Problem

Suppose the coefficient of elasticity of demand for labor is 3. What does this mean?

To determine

Coefficient of elasticity of demand for labor.

Explanation

Elasticity of labor demand is the percentage change in quantity demanded, which is divided by the percentage changes in wage rate is termed as labor elasticity of demand. The coefficient of elasticity of demand for labor is 3 means and the quantity demanded for labor reduces by 3 times for each 1 per cent increase in wage rate.

When the elasticity of demand for labor is greater than one, the demand for labor will be elastic...

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