11. Calculating the price elasticity of supply Juanita is a college student who lives in Denver and teaches tennis lessons for extra cash. At a wage of $50 per hour, she is willing to teach 7 hours per week. At $65 per hour, she is willing to teach 10 hours per week. Using the midpoint method, the elasticity of Juanita’s labor supply between the wages of $50 and $65 per hour is approximately , which means that Juanita’s supply of labor over this wage range is .

a. 1.35

b. Elastic

Explanation:

The formula for calculating the elasticity of supply using the midpoint method is as follows:

Elasticity of Supply = {(Q2 - Q1) ÷ [(Q2 + Q1) ÷ 2]} ÷ {(P2 - P1) ÷ [(P2 + P1) ÷ 2]}

Where,

Q1 = Hours spent at wage wage $50 = 7 hours

Q2 = Hours spent at wage wage $65 = 10 hours

P1 = Old wage = $50

P2 = New wage = $65

Substituting into the elasticity formula, we have:

Elasticity of Supply = {(10 - 7) ÷ [(10 + 7) ÷ 2]} ÷ {(65 - 50) ÷ [(65 + 50) ÷ 2]}

                                = {3 ÷ [17 ÷ 2]} ÷ {15 ÷ [115 ÷ 2]}

                                = 0.352941176470588  ÷ 0.260869565217391

Elasticity of Supply = 1.35294117647059  approximately 1.35

Therefore, the elasticity of Juanita’s labor supply between the wages of $50 and $65 per hour is approximately 1.35, which means that Juanita’s supply of labor over this wage range is elastic because the value of the elasticity of supply is greater than 1.

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

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conversion, and return on investment (kraemer, et al., 2000).

explanation: