Question
In: Economics
Suppose an individual has 40 hours to work. Suppose also the individ- ual has a net...
Suppose an individual has 40 hours to work. Suppose also the individ- ual has a net wealth outside the labor market of 100$. Suppose the wage rate is equal to 20 $ per hour. Graph the budget constraint. Suppose the marginal rate of substitution between consumption (C) and leisure (l) is equal to c/(l+10). What will a utility maximizing consumer choice between labor and consumption be? Suppose the wage falls to $5 per hour. What is the new choice of labor vs. consumption. Interpret this graphically (qualitatively and not quantitatively) in terms of substitution and income effects. Repeat this exercise with both 12 and 1000 hours respectively. [I want you to practice with and without the working hours limit (l ≤ h) binding. Feel free to raise or lower the wage rate in your practice to make this happen.
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
An individual investor has net Sec. 1256 losses of $400,000 in 2018. The individual also has...
An individual investor has net Sec. 1256 losses of $400,000 in
2018. The individual also has $100,000 of other long-term capital
gains. In 2014, the individual had $1,000,000 of Sec. 1256 gains
and $300,000 of other long-term capital gains from selling physical
gold. In 2015, the individual has no capital gains or losses. In
2016, the individual had $150,000 of Sec. 1256 gains and other long
– term capital gains of $85,000. In 2017, the individual had
$200,000 of long-term...
1. Suppose your average number of work hours per year has been 2000 hours with a...
1. Suppose your average number of work hours per year
has been 2000 hours with a standard deviation of 118 hours. Please
graph and calculate the probability you will work between 1900
hours and 2300 hours next year. Hint: Two Zs and be ready to add.
Use the “old” Z formula for this problem.
2. Based on the information in Problem #1, please
calculate the probability you will work between 2300 and 2500 hours
next year. (again please use the...
Suppose that we are to conduct the following hypothesis test: H0:μ=40 Ha:μ<40 Suppose that you also...
Suppose that we are to conduct the following hypothesis
test:
H0:μ=40 Ha:μ<40
Suppose that you also know that σ=11, n=109, x¯=38, and take
α=0.02. Draw the sampling distribution, and use it to determine
each of the following. Use four decimal places.
1. The value of the standardized test statistic:
2. The p-value is C. Your decision for the hypothesis test:
3.
A Reject H0.
B. Fail to Reject Ha.
C. Fail to Reject H0.
D. Reject Ha.
4. Suppose an individual can earn a wage of $20/hr, has 100 total waking hours this...
4. Suppose an individual can earn a wage of $20/hr, has 100
total waking hours this week, and has no source of non-labor
income. Let’s compare the incentives generated by two different
types of public programs.
• The Aid to Families with Dependent Children (AFDC) program
provides $100, at 0 hours of work, but imposes a 25% tax on earned
income up to the point where the benefit is paid back.
• The Earned Income Tax Credit (EITC) consists of...
Suppose an individual can earn a wage of $20/hr, has 100 total waking hours this week,...
Suppose an individual can earn a wage of $20/hr, has 100 total
waking hours this week, and has no source of non-labor income.
Let’s compare the incentives generated by two different types of
public programs.
The Aid to Families with Dependent Children (AFDC) program
provides $100, at 0 hours of work, but imposes a 25% tax on earned
income up to the point where the benefit is paid back.
The Earned Income Tax Credit (EITC) consists of a 50% wage...
Suppose an individual can earn a wage of $20/hr, has 100 total waking hours this week,...
Suppose an individual can earn a wage of $20/hr, has 100 total
waking hours this week, and has no source of non-labor income.
Let’s compare the incentives generated by two different types of
public programs.
The Aid to Families with Dependent Children (AFDC) program
provides $100, at 0 hours of work, but imposes a 25% tax on earned
income up to the point where the benefit is paid back.
The Earned Income Tax Credit (EITC) consists of a 50% wage...
Suppose an individual can earn a wage of $20/hr, has 100 total waking hours this week,...
Suppose an individual can earn a wage of $20/hr, has 100 total
waking hours this week, and has no source of non-labor income.
Let’s compare the incentives generated by two different types of
public programs.
The Aid to Families with Dependent Children (AFDC) program
provides $100, at 0 hours of work, but imposes a 25% tax on earned
income up to the point where the benefit is paid back.
The Earned Income Tax Credit (EITC) consists of a 50% wage...
Suppose a consumer has 60 hours per week to allocate between work and play, and the...
Suppose a consumer has 60 hours per week to allocate
between work and play, and the hourly wage rate is $30. She chooses
to have 20 hours of leisure and 40 hours of working. The government
imposes a $10 per hour income tax. With the tax, the consumer
chooses to have 25 hours of leisure.
On a graph with “leisure hours per week” on the
horizontal axis and “consumption in dollars” on the vertical to
illustrate your weekly budget constraint,...
2. Suppose that Person B has 16 hours a day available to work for pay or...
2. Suppose that Person B has 16 hours a day available to work
for pay or do unpaid activities. This person's wage rate is $10/hr.
Person B obtains the highest level of utility by working 5
hours/day (remotely). Today, Person B was told that she will begin
receiving $20/day in unearned income, say from interest on a
savings account.
a. (5 points) Draw a fully-labeled graph to
illustrate the shape of indifference curves that could lead Person
B to quit...
Consider an individual who allocates his total hours of work per week between the household and...
Consider an individual who allocates his total hours of work per
week between the household and a competitive market. The available
total number of hours of work is fixed at 50 per week. In the
market the wage (w) is equal to the value of marginal product of
labour. The value of marginal product of labour in the market
(VMPM) and the value of marginal product in the household (VMPH)
are given by the following equations:
VMPM = 100 -...
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