Other Things Being Equal, the Elasticity of Demand for Labor

question 21

Multiple Choice

Other things being equal, the elasticity of demand for labor will be greater the

• A) smaller the proportion of total costs accountable for by labor costs.
• B) smaller the elasticity of demand for the product it produces.
• C) larger the number of close substitute resources available.
• D) more rapid the decline in its marginal productivity.

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Definitions:

Capital Expenditures

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment, intended to improve long-term operational efficiency.

Revenue Expenditures

Costs that are charged to expense as incurred and are primarily associated with the maintenance and repair of fixed assets or for benefits within the current period.

Intangible Asset

An asset that lacks physical substance, such as patents, trademarks, and copyrights, holding value for a business.

Land

A non-depreciable asset representing the earth's surface that a business owns for operation purposes.