Final answer:
The scenario where an increase in pay rates results in many more applications indicates an elastic supply of labour, as it shows sensitivity to wage changes.
Step-by-step explanation:
The option that demonstrates an elastic supply of labour is: a) An increase in pay rates results in many more applications being received. This illustrates a situation where the quantity of labor supplied responds significantly to changes in wage rates, which is the definition of an elastic supply of labor. When wages increase, in an elastic labor market, we can expect a large increase in the quantity of labor supplied, meaning more people are willing to work at the higher wage. Conversely, if wages were to decrease, we might expect a large decrease in the quantity of labor supplied. Elasticity in labor supply can be affected by various factors, including the availability of qualified workers, the ease of entry into and exit from the job market, and the level of specialization required for the jobs. Markets with a high degree of labor supply elasticity tend to be those where workers can easily move between jobs and sectors without significant barriers or where skills are transferable.