Question 8 (1 point)

Suppose firms in an industry regard certain types of moderately skilled labor and advanced automation machinery as substitute goods with a cross-price elasticity of demand of 0.35. If over several years ongoing technology improvements lower the price of the machinery by 75%, what will be the change in quantity demanded by firms of this moderately skilled labor?

Question 8 options:

a)

-14.7%

b)

-26.3%

c)

-38.1%

d)

-6.9%