The Wage Rate Increases 8 Percent, and the Quantity Demanded

question 164

Multiple Choice

The wage rate increases 8 percent, and the quantity demanded of labor falls by 14 percent. The absolute value of the elasticity of demand for labor is

• A)0.57.
• B)1.75.
• C)0.25.
• D)5.00.

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Definitions:

Conservatism

A principle in accounting that recommends erring on the side of caution and underestimating rather than overestimating profits and values.

New Evidence

Recent information or data that offering fresh insights, usually changing or confirming existing understandings.

Behavioral Finance

A field of finance that proposes psychology-based theories to explain stock market anomalies and investing behaviors.

Security Prices

The cost at which securities, such as stocks or bonds, are bought and sold in the market, determined by supply and demand dynamics.