Consider the labor demand curve given by the equation 100 L =------- W
Question:
Consider the labor demand curve given by the equation
100
L = -------
W
For small changes in the wage around any given point on the curve, the slope of the curve (the change in L divided by the change in W) is given by the formula
100
Slope = ? --------
W 2
a. Find the slope of the curve for a small change in the wage around W = $5.
b. Find the own-wage elasticity of labor demand for a small change in the wage around $5.