Suppose That the Labor Cost to Total Cost Ratio in Industry

question 214

Multiple Choice

Suppose that the labor cost to total cost ratio in industry A is 14 percent, while in industry B it is 68 percent. Other things equal, labor demand will be

• A)more elastic in industry B than in A.
• B)relatively inelastic in both industries A and B.
• C)more elastic in industry A than in B.
• D)relatively elastic in both industries A and B.

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Definitions:

Mnemonic Devices

Tools that aid in the recall of information, using patterns, acronyms, or associations to help remember data.

Framing

The way information or issues are presented and the effect this presentation has on perception and decision-making.

Availability

In psychology, it refers to the ease with which a particular thought or memory can be accessed from memory, often influencing judgments and decision-making.

Representativeness

A cognitive heuristic where an individual categorizes a situation based on how similar it is to the typical case or to their standard representation of such a case.