Suppose that the labor cost-total cost ratio in industry A is 82 percent while in industry B it is 21 percent. Other things equal, labor demand will be:
A. more elastic in industry A than in B.
B. relatively inelastic in both industries A and B.
C. more elastic in industry B than in A.
D. relatively elastic in both industries A and B.
Answer: A
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Airlines charge business travelers more than leisure travelers because there is a more:
A. elastic demand for business travel. B. inelastic demand for business travel. C. elastic supply of business travel. D. inelastic supply of business travel.
There are no fixed costs in the long run.
Answer the following statement true (T) or false (F)
When do Federal Reserve notes become part of the money supply (M1)? When they are
A) deposited in the vaults of commercial banks. B) printed by the Bureau of Engraving. C) received by the Federal Reserve Banks. D) spent by the public on newly-produced goods. E) withdrawn from commercial banks by the public.
Answer the following questions true (T) or false (F)
1. One possible reason as to why consumers respond to sales is that by displaying a "high" regular price and a "low" sale price, sales provide consumers with a reference point to interpret the prices being offered. 2. The demand for gasoline is perfectly inelastic because most people need gasoline to drive their cars. 3. If the demand for a product is elastic, the quantity demanded changes by a larger percentage than the percentage change in price.