The following table gives the demand for labor at two different firms. The current wage rate in
Question:
The following table gives the demand for labor at two different firms.
The current wage rate in both firms is $7 per hour. A union would like to organize employees in one of the firms and bargain to raise the wage rate to $8 per hour. Calculate the wage elasticity of demand for each firm if the wage rate were increased from $7 per hour to $8 per hour. Which firm would the union be more interested in organizing? Why?
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Step by Step Answer:
To calculate the wage elasticity of demand for labor we can use the formula for elasticity Elasticity E Change in Quantity Demanded Change in Wage Rat...View the full answer
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Related Book For 
Modern Labor Economics Theory And Public Policy
ISBN: 9780132540643
11th Edition
Authors: Ronald Ehrenberg, Robert Smith
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