The Figures Below Give the Production Schedule and the Product

question 8

Multiple Choice

The figures below give the production schedule and the product demand schedule for a firm, which has to decide how many workers to hire. $\begin{array}{c}\begin{array}{lll}\\\text {Workers}\\\text {hired}\\0\\1\\2\\3\\4\\5\\6\end{array}\begin{array}{lll}\text {Total}\\\text {Physical}\\\text {Product}\\0\\10\\18\\25\\30\\34\\37\end{array}\begin{array}{lll}\text {Price of}\\\text {output}\\\$10\\\$10\\\$10\\\$10\\\$10\\\$10\\\$10\\\end{array}\end{array}$
-Which of the following is correct regarding the elasticity of labour demand?

• A) If the share of the labour costs in total costs is large, the derived demand for labour will be inelastic.
• B) If the product demand is elastic, the derived demand for labour will be inelastic.
• C) If the supply of substitute inputs is inelastic, the derived demand for labour will be inelastic.
• D) If capital and labour are easily substitutable, the derived demand for labour will be inelastic.
• E) None of the choices are correct.

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