Other Things Equal,the Own-Wage Elasticity of Demand for a Category

question 8

Multiple Choice

Other things equal,the own-wage elasticity of demand for a category of labor is higher when

• A) the price elasticity of demand for the product being produced is low.
• B) other factors of production can be easily substituted for the category of labor.
• C) the supply of other factors of production is highly inelastic.
• D) the cost of employing the category of labor is a small share of the total costs of production.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of the materials and labor used in their production.

Short-Term Obligations

Short-term obligations are debts or financial commitments that are due within a year.

Merchandise Inventory

Goods that a company holds for the purpose of sale to customers, typically reported as a current asset on the balance sheet.

Ending Inventory Balance

The total value of all the goods that a company still has on hand at the end of an accounting period.