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Peregrinus Peregrinus
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6 years ago
Suppose that a 5% increase in carpenters' wages causes a 1% drop in demand for plumbers.  What is the cross-wage elasticity of demand for plumbers with respect to the wage of carpenters?  Based on your calculation, are plumbers and carpenters gross substitutes or gross complements?  Briefly explain.
Textbook 
Modern Labor Economics: Theory and Public Policy

Modern Labor Economics: Theory and Public Policy


Edition: 12th
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6 years ago
= -0.2. Plumbers and carpenters are gross complements because the cross-wage elasticity is negative.
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