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  3. provide an explanationreasoning for each answer the ownwage elasticity of...

Question: provide an explanationreasoning for each answer the ownwage elasticity of...

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*provide an explanation/reasoning for each answer

  1. The own-wage elasticity of labor demand is higher when
    1. no other inputs can easily be substituted for labor.
    2. the demand for the output good is less elastic.
    3. the supply of other inputs is more elastic
    4. the costs of labor are a smaller share of total production costs.
    5. none of the above
  2. Another input is more likely to be a substitute for labor if
    1. the demand for the output good is less elastic.
    2. the supply of other inputs is more elastic.
    3. the costs of the other input are a smaller share of total production costs.
    4. none of the above.
    5. all of the above
  3. Suppose the marginal product of labor is 6 and the marginal product of capital is 3. If the wage rate is $4 and the price of capital is $2, then in order to minimize costs the firm should use
    1. more capital and less labor.
    2. more labor and less capital.
    3. more capital and labor.
    4. none of the statements associated with this question are correct.
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