Question

Beth is a retired teacher who lives in dallas and does some consulting work for extra cash. at a wage of $40 per hour, she is willing to work 7 hours per week. at $50 per hour, she is willing to work 10 hours per week. using the midpoint method, the elasticity of beth's labor supply between the wages of $40 and $50 per hour is approximately , which means that beth's supply of labor over this wage range is .

Answer 1

Price Elasticity of Supply. The price elasticity of supply is calculated as the percentage change in quantity divided by the percentage change in price.
 Using the Midpoint Method
 PES = ((Q2-Q1) / ((Q2 + Q1) / 2)) / ((P2-P1) / ((P2 + P1) / 2))
 PES = (((10) - (7)) / (((10) + (7)) / 2)) / (((50) - (40)) / (((50) + (40)) / 2))
 PES = 1.59
 the elasticity of beth's labor supply between the wages of $ 40 and $ 50 per hour is approximately 1.59
 In this case, to 1% rise in price causes an increase in quantity supplied of 1.59%
 answer:
 the elasticity of beth's labor supply between the wages of $ 40 and $ 50 per hour is approximately 1.59
 In this case, to 1% rise in price causes an increase in quantity supplied of 1.59%