If Janella increases her supply of labor by 6 percent in response to a 5 percent increase in the wage rate,her elasticity of labor supply must be

Question

Quizplus · Accepted Answer

The formula for elasticity of labor supply is:
Elasticity of labor supply = (Percentage change in quantity of labor supplied) / (Percentage change in wage rate)

Here, Janella increases her supply of labor by 6% in response to a 5% increase in the wage rate. So the percentage change in quantity of labor supplied is 6% and the percentage change in wage rate is 5%.

Using the formula above:
Elasticity of labor supply = (6% / 5%) = 1.2

Therefore, the answer is C) 1.2.

If Janella Increases Her Supply of Labor by 6 Percent