When wages are increased:
A)reductions in employment may occur if the demand for labor is elastic.
B)reductions in employment may occur if the demand for labor is perfectly inelastic.
C)increases in employment may occur if the demand for labor is elastic.
D)increases in employment may occur if the demand for labor is inelastic.
E)both productivity and the standard of living increase as well.

Question

Quizplus · Accepted Answer

If the demand for labor is elastic, an increase in wages may lead to reductions in employment as firms can find substitutes for labor, such as automation or outsourcing, to reduce their costs.

When Wages Are Increased