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- Subject
- Labour Marketeconomics-mcqs › labour-market
- Published
- 1 Jun 2019
- Last updated
- 28 May 2026
Under which circumstance is the demand for labor most likely to be inelastic with respect to wages?
Multiple choice question for Labour Market. Select an option, then review the explanation below.
Explanation
The demand for labor tends to be wage inelastic if wages make up only a small fraction of total costs, meaning changes in wages have little impact on overall expenses. Conversely, if the product demand is price elastic, or if labor can be easily replaced by capital or other inputs, labor demand becomes more wage elastic.
More Labour Market MCQs
Practice related questions from the same subject.
- 1.How do unions typically contribute to widening the wage gap between union members and non-union workers?
- 2.Under which circumstance can unions enhance efficiency?
- 3.Which of the following reasons explains why companies might choose to pay efficiency wages?
- 4.Which of the following government actions is least likely to decrease the unemployment rate?
- 5.What happens if the wage rate is set above the competitive equilibrium wage for any reason?