Question

Give reason "Concept of Elasticity of Demand helps trade union leaders".

Answer 1

The concept of elasticity of demand is used by trade union leaders in collective bargaining.for instance, the trade union leaders can bargain for higher wages if they know that the demand for their labour is inelastic.

Answer 2

Explanation:

Concept of Elasticity of Demand helps trade union leaders as -

- Knowledge of demand elasticity is useful in determination of wages - A trade union uses demand elasticity to seek higher rewards.  Elasticity of demand impacts pay allocation decisions.

- Higher wages are required by inelastic workers - If the market for a particular type of labour is inelastic, then the demand to claim for higher wages is simple for the trade union. The management has no option but to employ the labourers irrespective of the  wages.

- If the demand for labour is inelastic, the strike is effective - Even a small threat to go for strike would work effectively in the event of inelastic demand. The management then responds quickly and automatically increases the pay.