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Relative magnitudes of income effects

The firm’s wage elasticity of demand for the labor is least influenced by: (1) How much time the firm have to adjust to modifying wages. (2) The proportion of labor’s share of net costs. (3) The ease of replacement between labor and capital. (4) The relative magnitudes of income consequences and substitution effects in worker’s labor supply decisions. (5) The market power firm can exercise in labor market or as the seller of output.

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