yoko is a college student who lives in Dallas and teaches te

yoko is a college student who lives in Dallas and teaches tennis lessons for extra cash. At a wage of $25 per hour, she is willing to teach 6 hours per week. At $35 per hour, she is willing to teach 16 hours per week.

Using the midpoint method, the elasticity of Kyoko’s labor supply between the wages of $25 and $35 per hour is approximately ??? , which means that Kyoko’s supply of labor over this wage range is ???? .

Solution

Change in Wage rate: 35-25 = 10 Average wage rate: (25+35)/2 = 30 % Change in wagerate: 10/30 *100 = 33.33% Change in hour supplied: 16-6 = 10 Average hours supplied: (16+6)/2 = 11 % change in supply: 10 /11 * 100 = 90.91% Elasticity of labour supply: % change in supply/ % change in wage rate 90.91% /33.33% = 2.73 Supply of labour of Kyoko is Elastic supply.