question archive Poornima is a stay-at-home parent who lives in San Francisco and teaches tennis lessons for extra cash
Poornima is a stay-at-home parent who lives in San Francisco and teaches tennis lessons for extra cash
Subject:EconomicsPrice:2.88 Bought3
Poornima is a stay-at-home parent who lives in San Francisco and teaches tennis lessons for extra cash. At a wage of $30 per hour, she is willing to teach 3 hours per week. At $50 per hour, she is willing to teach 7 hours per week. Using the midpoint method, the elasticity of Poornima's labor supply between the wages of $30 and $50 per hour is approximately(1.6,0.13,0.63,25) , which means that Poornima's supply of labor over this wage range is (elastic, inelastic)
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Elasticity = (Change in labor hours / Average labor hours) / (Change in wage rate / Average wage rate)
= {(7 - 3) / (7 + 3) / 2} / {(50 - 30) / (50 + 30) / 2}
= 4 / (10 / 2) / {20 / (80 / 2)}
= (4 / 5) / (20 / 40)
= 0.8 / 0.5
= 1.6
Since the elasticity of labor supply is more than 1, labor supply is elastic.
