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Edexcel A-Level Economics A2 3.3.4 1b Factors That Influence the Elasticity of Demand for Labour Questions

Practise interpreting labour-demand elasticity values and explaining how capital substitution and labour's share of total costs change responsiveness.

Syllabus
First assessment 2019
Course
Economics YEC11
Level
A2

Exam points

  • interpret an inelastic coefficient, then link it to labour being difficult to replace with capital
  • explain why a high labour-cost share makes demand more elastic and a small share more inelastic

Edexcel A-Level Economics A2 3.3.4 1b Factors That Influence the Elasticity of Demand for Labour Questions question 1

[Maximum number: 1]

The elasticity of demand for agricultural workers in South Africa is estimated to be -0.3 . Which one of the following is the most likely reason for this value of the elasticity of demand for labour?

A

Labour cannot be easily replaced by capital

B

Wage rates are relatively high in the agricultural industry

C

Consumer demand for the final product is price elastic

D

Productivity is relatively low in the agricultural industry

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