The labor elasticity of demand = -1. This means that the labor elasticity of demand is unitary elastic meaning that the percentage change in wage rate leads to an equal percentage change iI the quantity of labor demanded. Explanation: Solution; The labor elasticity of demand assuming an initial wage of $2 per hour that rises to $4 per hour is given by the formula; The labor elasticity of demand = (dQL/dW)*W/QL. dQL= change in the quantity of labor demanded which is (20-40)=-20, dW is the change in wage rate which is $4$2=$2, W is the average wage rate= ($4+$2)/2=$3 and QL is the average quantity of labor demanded which is (20+40)/2=30. The labor elasticity of demand = (dQL/dW)*W/QL. The labor elasticity of demand = (-20/$2)*$3/30. The labor elasticity of demand = -1. This means that the labor elasticity of demand is unitary elastic meaning that the percentage change in wage rate leads to an equal percentage change iI the quantity of labor demanded