If a labor union tries to reduce the availability of substitutes for the product it sells, it is attempting to affect the __________ for labor. But if it tries to increase substitute factor prices, it is attempting to affect the __________ labor.
A)elasticity of demand; supply of
B)demand; elasticity of demand for
C)elasticity of demand; demand for
D)demand; supply of
E)none of the above

Question

Quizplus · Accepted Answer

Reducing the availability of substitutes for the product it sells would make the product more inelastic in demand, affecting the elasticity of demand for labor. Increasing substitute factor prices would make it more expensive for employers to use other inputs instead of labor, thus affecting the demand for labor itself.

If a Labor Union Tries to Reduce the Availability of Substitutes