In which situation is it likely that the demand for labour would be inelastic?
- Labour and capital are close substitutes
-
Labour costs are only a small proportion of total costs
- Demand for the final product that the labour produces is elastic
- A large quantity of unemployed labour is available in the economy
The correct answer is: B
Explanation
When specialised labour or capital is needed, then the demand for labour will be more inelastic with respect to the wage rate.