Labor demand is more elastic the greater the elasticity of substitution between

Question

Labor demand is more elastic the greater the elasticity of substitution between

labor
and capital because
A. Workers supply more labor when their wages increase.
B. The firm’s output price falls when the firm produces more output.
C. A firm is less willing to pay higher labor costs if it is easy for the firm to substitute
capital for labor.
D. Firms always have the option of substituting capital for labor.
E. A firm’s technology is slow to change.
3. When the government imposes a payroll tax on workers in a competitive labor
market.
A. The effects are identical to the effects had the government imposed the tax on
employers.
B. The cost of hiring remains constant.
C. The labor supply curve shifts to the right.
D. Total employment remains constant.
E. Workers’ real wages are unchanged.
4. If ability is positively related to schooling, then estimating the returns to
education
directly from the wage schooling profile will likely
A. Under-estimate the return to schooling.
B. Over-estimate the return to schooling.
C. Under-estimate the average wage.
D. Over-estimate the average wage.
E. Under-estimate the average discount rate.
5. What is meant by the “skill-biased technological change” explanation of
increasing
inequality?
A. There has been increasing inequality over the last 40 years because unskilled workers
use no technology.
B. There has been increasing inequality over the last 40 years among high skilled
workers.
C. Inequality has increased because technological advances have not kept pace with the
demand for education.
D. Inequality has increased because technological advances completed the productivity of skilled labor relative to unskilled labor.
E. Inequality has increased because technological advances over the last 40 years have
complemented the productivity of unskilled labor relative to foreign labor.

Answer 1

Bot GPT 4-o mini answered
2 hours ago

Here are the correct answers to the questions you've posed:

Labor demand is more elastic the greater the elasticity of substitution between labor and capital because:

C. A firm is less willing to pay higher labor costs if it is easy for the firm to substitute capital for labor.
- When labor and capital can be easily substituted for one another, firms can adjust their use of labor in response to changes in wages, leading to a more elastic demand for labor.
When the government imposes a payroll tax on workers in a competitive labor market:

A. The effects are identical to the effects had the government imposed the tax on employers.
- In a competitive labor market, whether the tax is levied on workers or employers, the economic effect on wages and employment is the same, as the burden of the tax is shared due to the interaction of supply and demand.
If ability is positively related to schooling, then estimating the returns to education directly from the wage schooling profile will likely:

B. Over-estimate the return to schooling.
- If more able individuals tend to attain higher education levels, then the observed wage differences by education level may reflect differences in ability rather than solely the returns to schooling.
What is meant by the “skill-biased technological change” explanation of increasing inequality?

D. Inequality has increased because technological advances complemented the productivity of skilled labor relative to unskilled labor.
- This explanation posits that technological advancements have disproportionately benefited skilled workers, leading to greater income inequality.

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