Question
Suppose the wages of fast-food line cooks rise by 4 percent while the wages of fast-food managers remain unchanged. Employment of fast-food line cooks falls
Suppose the wages of fast-food line cooks rise by 4 percent while the wages of fast-food managers remain unchanged. Employment of fast-food line cooks falls by 5 percent and employment of fast-food managers falls by 2 percent.
What is the cross-wage elasticity of fast-food line cooks and fast-food managers? (Round your answer to one decimal point.)
Are fast-food line cooks and fast-food managers gross complements or gross substitutes?
There is not enough information available to answer the question.
Gross substitutes
Neither gross complements nor gross substitutes
Both gross complements and gross substitutes
Gross complements
For these two categories of workers in fast food production, what can we say about the relative sizes of the scale effect and substitution effect?
The scale effect is larger than the substitution effect.
The substitution effect is larger than the scale effect.
There is not enough information available to draw conclusions about the relative sizes of these effects.
The scale and substitution effects are the same size.
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