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Pearson Edexcel IAL Economics 3.3.4.1b Factors that influence the elasti

Practise interpreting labour demand elasticity using substitutability, labour's cost share and links to demand for the final product.

Syllabus
First assessment 2019
Course
Economics YEC11
Level
A2

Exam points

  • distinguish elastic and inelastic labour demand from given elasticity values
  • explain how substituting capital for labour changes demand responsiveness
  • apply labour cost share to predict elasticity of demand for workers in context

3.3.4.1b - Factors that influence the elasticity of demand for labour 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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