The Relationship Between the Elasticity of Product Demand and the Elasticity

question 212

Multiple Choice

The relationship between the elasticity of product demand and the elasticity of demand for labor employed in its production is such that, other things being equal,

• A) the more elastic the demand for the product, the less elastic the demand for labor.
• B) the more elastic the demand for the product, the more elastic the demand for labor.
• C) the elasticity of product demand only affects the elasticity of labor demand when the product market is purely competitive.
• D) if product demand is perfectly elastic, labor demand will be perfectly inelastic.

---

Definitions:

Annual Interest Rate

The percentage increase in money that occurs over a year, which includes interest on loans, deposits, or investments.

Investments

Assets or items acquired with the goal of generating income or appreciating in value over time.

Interest on Interest

The concept of earning interest on the reinvestment of previous interest payments, a compound interest phenomena.

Average Annual Interest Rate

The average amount of interest earned or paid on an investment or loan over a one-year period, expressed as a percentage.