Question

Yvette is a college student who lives in San Francisco and does some consulting work for extra cash. At a wage of $35 per hour, she is willing to work 4 hours per week. At $45 per hour, she is willing to work 8 hours per week. Using the midpoint method, the elasticity of Yvette’s labor supply between the wages of $35 and $45 per hour is approximately , which means that Yvette’s supply of labor over this wage range is .

Answer 1

Answer:

The elasticity of Yvette's labor supply is 2.67 and the value is greater than 1  so the wage range is elastic.

Explanation:

The wage one is given as$W_1$=  $35

The Quantity of time is given as $T_1$=4 hours

The second wage is given as $W_2$=$45

The quantity of time for second wage is $T_2$=8 hours

So the calculation of elasticity is as

$CoE=\frac{T_2-T_1}{Q_2-Q_1} \times\frac{T_2+T_1}{Q_2+Q_1}$

By replacing the values

$CoE=\frac{T_2-T_1}{Q_2-Q_1} \times\frac{Q_2+Q_1}{T_2+T_1}\\CoE=\frac{8-4}{45-35} \times\frac{45+35}{8+4}\\CoE=\frac{4}{10} \times\frac{80}{12}\\CoE=0.4\times 6.67\\CoE=2.67$

So The elasticity of Yvette's labor supply is 2.67 and the value is greater than 1  so the wage range is elastic.