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3. Suppose that labor demand for male factory workers in an auto plant is given by Lfn = 400—40wm+50wf,
Where mm is the hourly wage rate for men and wf is the hourly wage of females. Calculate the own—and
cross-wage elasticity of demand at the point where mm = 20 and w; = 10 . Is the labor demand curve for males elastic or inelastic at this point? Are male and female workers gross complements or substitutes?

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3 ( @) given. LM= 400 -40 Wm + 50 WF
at WM= 20 and WF=10, Labour demand For make
workers will be
LOM = 400 - 40 ( 20 ) + 50 (10 )
= 400 - 800 + 500
= 900 - 800
= 100 .
( a )
Own wage elasticity

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