The demand for labor would most likely become more elastic as a result of:
A) a decrease in the elasticity of the demand for the product that the labor produces.
B) a decrease in the time for employers to make technological changes or purchase new equipment.
C) a decrease in the proportion of labor costs to total costs.
D) an increase in the proportion of labor costs to total costs.

Question

Quizplus · Accepted Answer

An increase in the proportion of labor costs to total costs would make the demand for labor more elastic, as employers would have a greater incentive to substitute other inputs (such as capital or technology) for labor if the price of labor were to rise.

The Demand for Labor Would Most Likely Become More Elastic