Module 7 Video Quizzes
An inelastic labor demand curve has which of the following traits?
It is steep or possibly even vertical
Suppose firms in a market with a labor demand relation of LD = 60 - 4W find the need to lower overall labor costs and decide to lower wages from $13 to $12. Using the mid-point formula, determine if this will successfully reach their goal.
No, the change reflects an elastic labor demand and a decrease in wage will result in an increase in total wages
When the cross wage elasticity of demand observed by changes in labor for carpenters in response to changes in wages for truck drivers is negative, what do we know about these workers?
They're complements in the production process
When the cross wage elasticity of demand for two types of workers results in an elasticity value > 0, what do we know about these types of workers?
They're substitutes in the production process
Government labor policies may change the elasticity value of certain workers when those policies are effective at changing the labor demand relation.
True
Which of the following might be a good description of complements in the labor process?
When the labor of one worker is at least somewhat dependent on that of another worker
An elastic labor demand curve has which of the following traits?
It is relatively flat or possibly even horizontal
What is the elasticity of labor demand for workers with a labor demand equation of LD = 75-4W using the mid-point formula given a change in wage from $10 to $12?
-1.41, elastic
If a particular type of worker with a labor demand elasticity value of -0.75, experiences an increase in wage from $12 to $12.36, what is the change in labor units and what is the typeof elasticity?
-2.25%, inelastic
Suppose moderately skilled workers have a labor demand relation of LD = 40 -3W. If the wage changes from $10 to $11 what is the elasticity value and label?
-3, elastic
When wages rise for a type of worker representing elastic labor demand, we expect to see which of the following?
A greater proportional decrease in the number of labor units
Suppose firms in a market with a labor demand relation of LD = 120 - 3W find the need to lower overall labor costs and decide to lower wages from $17 to $15. Using the simple formula, calculate the elasticity and determine if this will successfully reach their goal.
-0.74, inelastic: total labor costs will decline
Which of the following represents an own wage elasticity of demand equation?
%Li/%Wi
Labor demand elasticity with respect to wage and labor unit changes for a particular type of worker is expected to be which of the following?
<0
What sign would we expect for the elasticity of labor demand for auto sales representatives in response to an increase in wages for insurance sales representatives if we suppose sales skills are transferable?
> 0, substitutes
The presence of an employment contract may effectively alter or mitigate the effect of the elasticity of labor demand if the contract contains which of the following?
A clause limiting the number of works a signing firm can lay off or terminate in any given period of time
If the own wage elasticity for carpenters is -3 and the own wage elasticity for electricians is -0.7, which of the following might we suppose about carpenters and electricians?
Carpenters suffer greater proportional job losses than electricians when the wage for each changes by 5%
Cross wage elasticity refers to which of the following?
Changes in labor units for a given type of worker in response to changes in wage for another type of worker
Own wage elasticity refers to which of the following?
Changes in labor units for a given type of worker in response to changes in wage for that same worker
A type of worker that experiences a 10% loss of labor units as a result of a wage increase of 3% is thought to have which of the following?
Elastic labor demand
The mid-point formula and the simple formula may offer slightly different elasticity values, but always will result in consistent elastic, inelastic, and unit elastic labeling.
False
Unions prefer to organize workers with which of the following elasticity characteristics?
Inelastic, <|-1|
Suppose firms in a market with a labor demand relation of LD = 120 - 3W find the need to lower overall labor costs by at least 10% and decide to lower wages from $17 to $15: a change of -11.76%. Using the mid-point formula, determine if this will successfully reach their goal.
No, the wage change will result in a decrease in labor costs of 4.1%
The relationship between the attractiveness of certain workers to union organizers is counter-intuitive as illustrated by which of the following?
Often unionized lower wage workers that are highly substitutable are less attractive to union organizers but are in greater need of the benefits afforded by collective bargaining
The term unitary or unit elastic suggests which of the following?
The change in price and quantity both adjust in equal proportions
The term inelastic suggests which of the following:
The change in wage is greater than the resultant change in labor
Which of the following best describes the mid-point formula?
The mid-point formula is slightly more complex and accurate than the simple formula when wage changes are relatively large
Which of the following is most accurate?
The mid-point formula provides more accurate results than the simple formula when the change in wage is great