Certified Human Resource Professional (CHRP) Practice Exam

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Study for the Certified Human Resource Professional Test. Utilize multiple choice questions with detailed explanations to enhance your HR knowledge. Prepare thoroughly and increase your chances of passing the CHRP Exam.

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Which of the following demonstrates an elastic supply of labour?

An increase in pay rates results in many more applications being received.
An increase in pay rates has no influence on the number of applications received.
An increase in the demand for labour results in an increase in market rates.
An increase in the demand for labour has no influence on market rates.

The correct answer is: An increase in pay rates results in many more applications being received.

An elastic supply of labor refers to a situation where the quantity of labor supplied responds significantly to changes in wages or pay rates. When an increase in pay rates results in many more applications being received, it indicates that potential workers are more willing to enter the labor market or increase their working hours due to the financial incentive. This responsiveness is a hallmark of elastic supply, as it showcases that changes in wage levels can lead to substantial changes in the quantity of labor supplied. In this context, the other options reflect scenarios of inelastic supply. When pay rates do not influence the number of applications received, this suggests that potential workers are not inclined to alter their decision to work based on wage changes, indicating rigidity in the labor supply. Similarly, an increase in demand for labor that results in higher market rates or one that does not influence market rates also points to a less responsive supply curve where labor supply does not adjust in accordance with demand shifts. Therefore, the answer highlights a key principle of labor economics regarding supply elasticity in relation to wage changes.