An industry hires 30 workers when the wage is $20. It raises the number of workers...

An industry hires 30 workers when the wage is $20. It raises the number of workers hired to 56 when the wages fall to $10. What is the short-run elasticity of labor demand? Is the demand elastic or inelastic?

Expert Solution

Short run elasticity of labour demand={( 56–30)/(10–20)}×(20/30)

Short run elasticity of labour demand= {–26/10}×(20/30)

Short run elasticity of labour demand= –1.73

The demand is Elastic.

Rahul Sunny answered 2 years ago

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