Amy is a graduate student living in Dallas who works as a caddy to supplement their normal income. At an hourly wage rate of $15, they are willing to caddy 5 hours per week. Upping the wage to $25 per hour, they are willing to caddy 14 hours per week. Using the midpoint method, the elasticity of Amy’s labor supply between the wages of $15 and $25 per hour is approximately (0.06, 0.53, 1.89, 10.56) , which means that Amy’s supply of labor over this wage range is (elastic/inelastic) .
Amy is a graduate student living in Dallas who works as a caddy to supplement their normal income. At an hourly wage rate of $15, they are willing to caddy 5 hours per week. Upping the wage to $25 per hour, they are willing to caddy 14 hours per week. Using the midpoint method, the elasticity of Amy’s labor supply between the wages of $15 and $25 per hour is approximately (0.06, 0.53, 1.89, 10.56) , which means that Amy’s supply of labor over this wage range is (elastic/inelastic) .
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Amy is a graduate student living in Dallas who works as a caddy to supplement their normal income. At an hourly wage rate of $15, they are willing to caddy 5 hours per week. Upping the wage to $25 per hour, they are willing to caddy 14 hours per week.
Using the midpoint method, the elasticity of Amy’s labor supply between the wages of $15 and $25 per hour is approximately (0.06, 0.53, 1.89, 10.56) , which means that Amy’s supply of labor over this wage range is (elastic/inelastic) .
Expert Solution
Step 1
Elasticity measures the change in quantity due to change in price.
The supply is said to be elastic when the value of elasticity is greater than 1.
The supply is said to be inelastic when the value of elasticity is less than 1.
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