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In which situation is it likely that the demand for labour would be inelastic?


Question

In which situation is it likely that the demand for labour would be inelastic?

Options

A)
Labour and capital are close substitutes
B)
Labour costs are only a small proportion of total costs
C)
Demand for the final product that the labour produces is elastic
D)
A large quantity of unemployed labour is available in the economy

The correct answer is B.


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