The concept of price elasticity of supply can be applied to labor:
A) to show the amount of income earned at different wage rates.
B) to show how the quantity of labor supplied responds to changes in wages and salaries.
C) to determine how responsive the demand for labor is to changes in wages and salaries.
D) to do all of the above.

Question

Quizplus · Accepted Answer

Price elasticity of supply measures how responsive the quantity supplied of a good or service is to changes in its price. In the case of labor, price elasticity of supply measures how responsive the quantity of labor supplied is to changes in wages and salaries. This means that as wages and salaries increase, more people may be willing to work, resulting in a larger quantity of labor supplied. Similarly, as wages and salaries decrease, fewer people may be willing to work, resulting in a smaller quantity of labor supplied. Price elasticity of supply can help determine how responsive the labor market is to changes in wages and salaries. However, it does not directly show the amount of income earned at different wage rates or the responsiveness of labor demand.

The Concept of Price Elasticity of Supply Can Be Applied