Question

1. For each of the following pairs, state which market would have the greatest elasticity.  Explain.

1. 1. Airline pilots vs. bank tellers
2. 2. Electrical utility workers vs. restaurant workers
3. 3. Bank tellers in the short run vs. bank tellers in the long run

  

Answer 1

A - Market for bank tellers will have greater elasticity because of greater numbe of options in the market. Airplane pilots are difficult to find , they are very less in number and demand high degree of specialisation. Hence Bank tellers will be more elastic.

B - The work of restuarant workers does not depend upon any skill or training. It can be done by anyone hence gives a lot of choices. Hence market for restaurant workers will be more elastic

C - Bank teller market in long run will be more elastic. In the long run , more options develop and hence there are greater choices that increase elasticity.