If Wages Increase at a 5% Rate and the Quantity

question 255

Multiple Choice

If wages increase at a 5% rate and the quantity demanded of labor decreases by 10%, then the elasticity of demand for labor is

• A) 50.
• B) 0.5.
• C) 2.
• D) 10.

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Definitions:

Financial Leverage

The use of borrowed money to increase the potential return of an investment, which also increases the risk of loss.

EPS

Earnings Per Share, a measure of a company's profitability calculated by dividing its net earnings by the number of outstanding shares.

Earnings Per Share

A company's net income divided by the number of its outstanding shares, indicating the company's profitability on a per-share basis.

Debt

An amount of money borrowed by one party from another, typically repaid with interest.