Suppose That,as a Result of a Decrease in the Market

question 34

Multiple Choice

Suppose that,as a result of a decrease in the market supply of labor,the wage rate has risen 10%.After adjusting its employment level,a firm finds its total wage bill has decreased.This occurrence indicates that the firm's labor demand:

• A)is inelastic over this range of wages
• B)is elastic over this range of wages
• C)is unit elastic over this range of wages
• D)was inelastic at the old wage,but is elastic at the new,higher wage

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