Question

One factor that affects the elasticity of demand for labor is its share of total production costs. The greater labor's share of production costs, the___________ elasticity of demand for labor. The year is 2035. In many occupations, robots are replacing humans. As it turns out, robots make very good factory workers but very poor ski instructors. Assuming the other determinants of demand for the two services are roughly similar, you would expect the demand for human ski instructors to be__________ the demand for human factory workers.

Answer 1

Answer:

The greater labor's share of production costs, the higher elasticity of demand for labor.

When labor costs are a high share of total production costs, the elasticity of labor demand is higher. For example, customer service jobs like fast foods, or gas pumping, have high labor costs as a percentage of total production costs, and these sectors have a very elastic labor demand.

you would expect the demand for human ski instructors to be less elastic the demand for human factory workers.

In the year 2035, with robots having replaced most humans in factory jobs, occupations such as ski instructor, or dance instructor, or musician, would have a low labor demand elasticity because these skills are not easily learned, or easily replicated by a robot, meaning that the humans specialized in those jobs will be more demanded, and the demand for their labor will be more stable.