Hi I have a microeconomics question laura is a retired teach

Hi, I have a microeconomics question:

laura is a retired teacher who lives in chicago and provides math tutoring for extra cash. At a wage of $75 per hour, she is willing to tutor 18 hours per week. At $100 per hour, she is willing to tutor 20 hours per week. Using the midpoint method, the elasticity of Laura`s labor supply between wages of $75 and $100 per hour is_ (2.71, 1,0.4,0.37), which means that Laura`s supply of labor over the wage range is_( elastic, unit elastic, inelastic).

Solution

Elasticity = [Change in hours / Average hours] / [Change in hourly rate / average hourly rate]

= [(20 - 18) / (20 + 18) / 2] / [(100 - 75) / (100 + 75) / 2]

= [2 / 19] / [25 / 87.5]

= 0.1053 / 02857

= 0.37

Since elasticity is less than 1, labor supply is inelastic.