Statement 1: If the elasticity of demand for labor is elastic, then firms hiring

Question

Statement 1: If the elasticity of demand for labor is elastic, then firms hiring the workers are sensitive to changes in the wage. Statement 2: If the elasticity of demand for labor (EL) is elastic, then EL must have a value greater than one.

Are both statements true?

2. How does the addition of 1 million immigrants affect (i) employment of farm workers and (ii) employment of native U.S. farm workers?

A. Total Employment rises by less than 1 million workers so employment of native US workers falls.

B. Total employment falls so employment of native US workers falls by more than 1 million

C. Total employment is unchanged, but employment of native US workers falls by 1 million.

D. Total employment rises by 1 million, and total employment of native US workers is unchanged.

C?!

Explanation / Answer

1. Only 2nd one is true.

2. Total Employment rises by less than 1 million workers so employment of native US workers falls.

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