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Union A finds that a wage of $4 per hour leads to demand for 20,000 person-hours and a wage of $5...

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Union A finds that a wage of $4 per hour leads to demand for 20,000 person-hours and a wage of $5 per hour leads to demand for 10,000 person-hours. Union B finds that a wage of $6 per hour leads to demand for 30,000 person-hours, while a wage of $5 per hour leads to demand for 33,000 person-hours.

a. Which union faces the more elastic demand curve? Describe 2 Hicks-Marshall laws that might explain that union's elasticity.

b. Which union will be more successful in increasing the total income (wages times person-hours) of its membership?

Elasticity of Demand

The elasticity of demand is determined by the dividing the percentage of change in quantity demanded by the percentage of change in price. It helps see the impact of price changes in the demand for products or services.

Answer and Explanation: 1

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a.

Based on the information given, the elasticity of demand for labor is not constant. The wage rate from which an individual started is the basis for...

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The Elasticity of Demand: Definition, Formula & Examples

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Chapter 3 / Lesson 7
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Understand what elasticity of demand is and discover different types of elasticity of demand. Learn how it is measured and review the elasticity of demand formula.


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