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Kevin is a retired teacher who lives in Philadelphia and teaches tennis lessons for extra cash. At a wage of $40 per hour, he is willing to teach 7 hours per week. At $50 per hour, he is willing to teach 10 hours per week. Using the midpoint method, the elasticity of Kelvin's labor supply between the wages of $40 and $50 per hour is approximately, which means that Kelvin's supply of labor over this wage range is:_______.

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letmeanswer

Kelvin's supply of labor over this wage range is 3.80

Explanation:

This is Price elasticity supply issue, and wages / hours are independent variables.

Price elasticity of supply tests the response to the supply of a product or service following a shift in its market price. The supply of a good will increase as its prices rise according to basic economic principles. On the other hand, when its price declines, goodwill supplies decline

So, PES ( Kevin's labor) = {(10-7)/[(10+7)/2)} /{(50-40)/[(50+40)/2]}

                                       = 24.75/6.5 = 3.80

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