Which of the following statements is true of the industry demand for labor?
A)The lesser the elasticity of the final product,the higher the elasticity of the industry labor demand curve.
B)The longer the time period allowed for adjustment,the lesser the elasticity of the industry labor demand curve.
C)The lower the substitutability of inputs,the higher the elasticity of the industry labor demand curve.
D)The lower the supply elasticity of other inputs,the lesser the elasticity of the industry labor demand curve.

Question

Quizplus · Accepted Answer

The elasticity of the industry labor demand curve is influenced by the supply elasticity of other inputs. When the supply elasticity of other inputs is low, firms have less flexibility to substitute away from labor when its price increases, making the labor demand curve less elastic. This is because firms cannot easily replace labor with other inputs if those inputs cannot be readily adjusted.

Which of the Following Statements Is True of the Industry