Yvette is a retired teacher who lives in Chicago and provides math tutoring for extra cash. At a wage of $50 per hour, she is willing to tutor 10 hours per week. At $75 per hour, she is willing to tutor 18 hours per week. Using the midpoint method, the elasticity of Yvette's labor supply between the wages of exist50 and $75 per hour is _____, which means that Yvette's supply of labor over this wage range is _____.

a. elastic

b. unit elastic

c. inelastic.

The answer is a. The supply elasticity in this market is: 1.4285. Since this is over 1, this is relatively elastic. For an elasticity to be unitary elastic, the % change in quantity equals the % change in price and the elasticity must equal 1. If the % change in price is higher than the % change in quantity, the value will be lower than 1 and it is inelastic.

The formula to find supply elasticity is: Es = %changeQs/%changeW (Qs = quantity supplied and W = wage)

%changeQs = (NewQs - OldQs)/MidQs X 100 = _%

%changeQs = (NewW - OldW)/MidW X 100 = _%

MidQs = (NewQs + OldQs)/2

MidQs = (NewP + OldP)/2

MidQs = (18 + 10)/2 = 14

MidQs = (75 + 50)/2 = 62.5

%changeQs = (18 - 10)/14 X 100 = 57.14%

%changeQs = (75 - 50)/62.5 X 100 = 40 %

Es = 57.14%/40% = 1.4285