Elasticity of labor demand measures the responsiveness of demand when there is a change in the wage rate. It depends on:

•Labor costs as a % of total costs: When labor expenses are a high % of total costs, then labor demand is more elastic.
•Ease and cost of factor substitution: Labor demand is more elastic when a firm can substitute easily between labor and capital inputs.
•Price elasticity of demand for the final output: This determines whether a firm can pass on higher labor costs to consumers in the form of increased prices.



Elasticity of labor demand measures the responsiveness of demand when there is a change in the wage rate. It depends on:

•Labor costs as a % of total costs: When labor expenses are a high % of total costs, then labor demand is more elastic.
•Ease and cost of factor substitution: Labor demand is more elastic when a firm can substitute easily between labor and capital inputs.
•Price elasticity of demand for the final output: This determines whether a firm can pass on higher labor costs to consumers in the form of increased prices.



Elasticity of labor demand measures the responsiveness of demand when there is a change in the wage rate. It depends on:

•Labor costs as a % of total costs: When labor expenses are a high % of total costs, then labor demand is more elastic.
•Ease and cost of factor substitution: Labor demand is more elastic when a firm can substitute easily between labor and capital inputs.
•Price elasticity of demand for the final output: This determines whether a firm can pass on higher labor costs to consumers in the form of increased prices.



Elasticity of labor supply measures the extent to which labor supply responds to a change in the wage rate in a given time period



Elasticity of labor supply measures the extent to which labor supply responds to a change in the wage rate in a given time period





Last modified: Tuesday, August 14, 2018, 10:14 AM