How would a decision by the owners of the copper smelters to operate each smelter longer than has been the practice in the past affect the elasticity of demand for labour in the copper industry?
Either they will have to hire more workers, or their current workers will be working longer hours per week.
What do YOU THINK the results of all this would be?
To determine how a decision by the owners of the copper smelters to operate each smelter longer would affect the elasticity of demand for labor in the copper industry, we need to understand the concept of elasticity of demand for labor.
Elasticity of demand for labor measures the responsiveness of the demand for labor to changes in the wage rate. It can be influenced by various factors, including the availability of substitutes for labor, the time period under consideration, and the specific industry characteristics.
If the owners of the copper smelters decide to operate each smelter longer than before, this would increase the level of production in the copper industry. When the level of production increases, the demand for labor generally tends to increase as well. Therefore, it is likely that the demand for labor in the copper industry would increase.
Now, let's consider the effect on the elasticity of demand for labor. Elasticity of demand for labor depends on how easily firms can substitute capital or other factors of production for labor. In the case of copper smelters, it is possible that there may be some substitutes for labor, such as automation or machinery.
If the owners of the copper smelters decide to operate each smelter longer by employing more capital-intensive methods such as automation, the elasticity of demand for labor could decrease. This is because capital-intensive methods reduce the dependence on labor, making it less responsive to changes in the wage rate. As a result, the demand for labor becomes less elastic.
On the other hand, if the decision to operate each smelter longer does not involve significant changes in the production process or capital intensity, the elasticity of demand for labor may remain relatively unchanged.
In summary, the decision by the owners of the copper smelters to operate each smelter longer may affect the elasticity of demand for labor in the copper industry depending on the extent of substitution between labor and other factors of production. If capital-intensive methods are employed, the demand for labor may become less elastic. However, if there are no significant changes in the production process, the elasticity of demand for labor may not be significantly affected.