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

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

Step-by-step 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=(T_2-T_1)/(Q_2-Q_1) *(T_2+T_1)/(Q_2+Q_1)`

By replacing the values

`CoE=(T_2-T_1)/(Q_2-Q_1) *(Q_2+Q_1)/(T_2+T_1)\\CoE=(8-4)/(45-35) *(45+35)/(8+4)\\CoE=(4)/(10) *(80)/(12)\\CoE=0.4* 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.