Suppose that the labor demand for restaurant waiters in a small city is LD = −10 + 20w where w is wage in dollars per hour. 1. Derive the formula of the wage-elasticity of labor demand. 2. Solve for the wage-elasticity of labor demand at the following wage rates below. Tell whether labor demand is elastic, inelastic, or unit elastic at each given wage rate. a. w = 4 b. w = 6

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