Labor demand is more elastic the greater the elasticity of demand for the firm's output because
A. capital is usually price elastic.
B. the firm will want to hire fewer workers when the wage rate increases.
C. a firm that operates in a competitive output market cannot lower its price.
D. the firm's output price falls when the firm produces less output.
E. the firm would see its quantity demanded fall substantially if the firm tried to pass increased labor costs through to the consumer by increasing the price of the output good.
Answer: E
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