Question
In: Economics
2. a. Graph a budget constraint for an individual with 280 hours a week, nonlabor income...
2. a. Graph a budget constraint for an individual with 280 hours a week, nonlabor income of $120 per week, and a wage of $10 per hour.
Show this person's indifference curve such that he is working 50 hours a week. Label his leisure, labor, and income.
b. suppose this individual decides to work 60 hours a week once his wage increases to $12 per hour. Which portion of his labor supply curve is he on (Is the substitution effect or income effect dominant for this individual?)
c. Graph his new equilibrium.
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
For each of the following cases, (1) graph the budget constraint and at LEAST 2 indifference...
For each of the following cases, (1) graph the budget constraint
and at LEAST 2 indifference curves (2) indicate the utility
maximizing point (and the indifference curve that corresponds with
that point) (3) SHOW and briefly explain what you would expect to
happen if the price of the good changed as indicated, in terms of
income and substitution effects. (Show income and substitution
effects on your graph too) In all cases, assume that your intital
income is $50 and that...
For each of the following cases, (1) graph the budget constraint and at LEAST 2 indifference...
For each of the following cases,
(1) graph the budget constraint and at LEAST 2 indifference
curves,
(2) indicate the utility maximizing point (and the indifference
curve that corresponds with that point),
and (3) SHOW and briefly explain what you would expect to happen
if the price of the good changed as indicated, in terms of income
and substitution effects. (Unlike the exam, you MUST
show income and substitution effects on the graph.)
In all cases, assume that your intital income...
(b) Suppose that an individual earns an income of $280. If there is an income maintenance...
(b) Suppose that an individual earns an income of $280. If there
is an income maintenance program where the income guarantee is $300
and the benefit reduction rate is 60. What is their level of
subsidy?
Answer:
(c) What is the basis for the backward-bending shape of the
labor supply curve and how have neoclassical economists sought to
integrate income and substitution effects into the labor supply
curve?
Answer:
Using a set of data, you will graph a budget constraint and express it as an...
Using a set of data, you will graph a budget constraint and
express it as an algebraic equation. You will also determine the
combination of two goods that gives the maximum total utility.
Instruction: Suppose that as a consumer you have $34 per month
to spend for munchies, either on pizzas which cost $6 each or on
Twinkies which cost $4 each. Suppose further that your preferences
are given by the following total utility table.
Count
1
2
3
4...
Mary is a single mother, with $250 in nonlabor income per week, and she can earn...
Mary is a single mother, with $250 in nonlabor income per week,
and she can earn $15 per hour working between 0 and 60 hours per
week. If Mary decides to work, then she will neeed to pay
high-quality day care, which costs a fixed $150 per week. Now
suppose a welfare program is put in place to subsidize the cost of
day care for single mothers working at least 20 hours per week.
Suppose that as long as the...
Principles of Macroeconomics Construct a Budget Constraint (in an Algebraic equation and Graph form) for 'Rational'...
Principles of Macroeconomics
Construct a Budget Constraint (in an Algebraic equation and
Graph form) for 'Rational' Consumer A from the following
characteristics: Total resources = 2000 units; Good X ; Price of
Good X = 200 units; Good Z; Price of Good Z = 10 units: Identify
(label) areas of 'economic efficiency' and 'economic inefficiency'.
Explain what is meant by 'economic efficiency' and 'economic
inefficiency'.
Assume that an individual wins a lottery. Assume also that the individual was working before the lottery win and had no other nonlabor income before the lottery win.
Assume that an individual wins a lottery. Assume also that the individual was working before the lottery win and had no other nonlabor income before the lottery win.
a) Using the basic static model of individual labour supply, discuss both graphically and explain in your own words how the lottery win will affect the individual’s level of hours worked. Discuss all relevant effects.
b) Is it possible that the individual decides to stop working following the lottery win? In...
Assume that an individual wins a lottery. Assume also that the individual was working before the lottery win and had no other nonlabor income before the lottery win.
Assume that an individual wins a lottery. Assume also that the individual was working before the lottery win and had no other nonlabor income before the lottery win.
a) Using the basic static model of individual labour supply, discuss both graphically and explain in your own words how the lottery win will affect the individual’s level of hours worked. Discuss all relevant effects.
b) Is it possible that the individual decides to stop working following the lottery win? In your...
Assume that an individual wins a lottery. Assume also that the individual was working before the lottery win and had no other nonlabor income before the lottery win.
Assume that an individual wins a lottery. Assume also that the individual was working before the lottery win and had no other nonlabor income before the lottery win.
a) Using the basic static model of individual labour supply, discuss both graphically and explain in your own words how the lottery win will affect the individual’s level of hours worked. Discuss all relevant effects.
b) Is it possible that the individual decides to stop working following the lottery win? In your...
An individual consumer’s utility function and the budget constraint are described below. (ch. 5). U =...
An individual consumer’s utility function and the budget
constraint are described below. (ch. 5). U = x1x2 s.t. m = p1x1 +
p2x2 where, m = $100, p1 = $5, and p2 = $2. (i) Find the marginal
rate of substitution between x1 and x2. [Show your work] (ii) Find
the slope of the budget constraint. [Show your work] (iii) Given
the answers to (i) and (ii), find the optimal amount of each good,
x⇤ 1 and x⇤ 2. [Show...
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