For the following three questions, assume that leisure is a normal good. a A worker has a wage of £10 an hour, and chooses to work eight hours a day. Represent this decision in a suitably labelled graph. (Assume convex preferences) The worker is taxed a lump sum of £30. Show the effect on the budget curve graphically. Would labour supply go up or down? C Return to the scenario in question 3. The worker's wage increases from £10 an hour to £12. Assuming that the substitution effect dominates the income effect, would hours worked go up or down? Show these two effects in a suitably labelled graph. (Change in hours don't need to be specific- it is the direction we care about here.)

For the following three questions, assume that leisure is a normal good. a A worker has a wage of £10 an hour, and chooses to work eight hours a day. Represent this decision in a suitably labelled graph. (Assume convex preferences) The worker is taxed a lump sum of £30. Show the effect on the budget curve graphically. Would labour supply go up or down? C Return to the scenario in question 3. The worker's wage increases from £10 an hour to £12. Assuming that the substitution effect dominates the income effect, would hours worked go up or down? Show these two effects in a suitably labelled graph. (Change in hours don't need to be specific- it is the direction we care about here.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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B: Theory: Labour supply For the following three questions, assume that leisure is a normal good. 3. A worker has a wage of £10 an hour, and chooses to work eight hours a day. Represent this decision in a suitably labelled graph. (Assume convex preferences) 4. The worker is taxed a lump sum of £30. Show the effect on the budget curve graphically. Would labour supply go up or down? 5. Return to the scenario in question 3. The worker's wage increases from £10 an hour to £12. Assuming that the substitution effect dominates the income effect, would hours worked go up or down? Show these two effects in a suitably labelled graph. (Change in hours don't need to be specific - it is the direction we care about here.)
2. Suppose W-$15/hr. I income per week. N-hours of leisure per week. a. Find the equation of the income/leisure budget constraint. b. Graph the budget constraint. c. Find the weekly income of someone who chooses 15 hours of leisure per day. d. Suppose that by some miracle the number of hours in the day increased from 24 to 30 hours. Would this change the budget constraint? If your answer is yes, how would the budget constraint change. %3D
6 Assume you can work as many hoursyou wish at £12 per hour (net of tax). If you do not work you have noincome. You have no ability to borrow or lend, so your consumption,c , is simply equal to your income. d) Now assume that you receive an income of £140 per week from anunknown benefactor. Show the impact on your feasible set (nb : be morecareful than Stephen was in his diagrams in Autumn Week 5!), and show anew optimal choice in which consumption increases but labour supplydecreases. Using the concept of the marginal rate of substitution, explainwhy this is a likely outcome.e)Now assume that, starting from the optimal point in d), your wageincreases to £18 per hour. Explain why the impact of this change isambiguous, and relate to the longrun historical experience of wagegrowth in rich countries. Please help me solve 6 e and illustrate on a diagram so I can better understand it please thank you.
1. What is the relationship between working hours and wage levels? (A). An increase in the wage rate increases working hours if the substitution effect dominates the income effect. (B). An increase in the wage rate reduces the hours worked if the dominating effect is a substitution effect. (C). A decrease in the wage rate increases working hours if the substitution effect dominates the income effect. (D). Answers (A) and (B) are correct. (E). Answers (A) and (C) are correct.
D E B 04 What does point D on this graph represent? O An optimal choice O A choice on the budget constraint O An impossible choice given the income O A choice that would result in income left over
1. Cynthia can work up to 16 hours per day at her job. Her wage rate is $15 per hour. a. Suppose Cynthia receives zero nonlabour income. Draw her daily budget constraint. b. Suppose Cynthia's receive an overtime pay premium of 50 percent for all work beyond eight hours per day. Draw her daily budget constraint. c. Suppose Cynthia receives a 20 percent wage increase. Draw her daily budget constraints with and without the overtime premium after 8 hours of work per day. d. Suppose Cynthia receives a nonlabour income of $40 per day. Re-draw her budget constraints for parts a – C. -
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cook -int ences a) Chika has calculated the marginal utility that she derives from her paid employment and from leisure. This is presented in table below. In her ideal world, where she could work as few or as many hours as she wished, how would she allocate her sixteen waking hours? (She does need to sleep.) Hours 1 2 3 4 5 6 7 8 9 10 MU Paid Employment 80 75 70 65 60 55 50 45 40 35 MU Leisure 120 110 100 90 80 70 60 50 40 30 9 hours working and 40 hours leisure. b) Unfortunately, Chika begins to realize that unless she gets an education she will not enjoy a high salary and therefore, will not be able to afford more leisure time. She therefore decides to spend six hours each day studying (in addition to her eight hours of sleep). How will she now divide the remaining hours between work and leisure?! hours working and hours leisure. Help Save C
1. Refer to graph (multiple choice) graph represents Cara's budget constraint and preferences A. Refer to Graph, Which of the statements below is the most accurate? a. At point A, Cara's marginal valuation of leisure is higher than the market wage b. At point B, Cara's marginal valuation of leisure is higher than the market wage. c. At point B, Cara values leisure the same amount as at point A. d. At point A, Cara's marginal valuation of leisure is higher than the market wage, and at point B, Cara values leisure the same amount as at point A. B. Refer to Graph, At point A, Cara’s marginal rate of substitution of leisure for income a. exceeds the wage and Cara would like to work fewer hours. b. is less than the wage and Cara would like to work more hours. c. exceeds the wage and Cara would like to work more hours. d. is less than the wage and Cara would like to work fewer hours. C. Refer to Graph, Based on the graph above, we can conclude that a. Cara does not have…
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A worker views leisure and income as “goods” and has an opportunity to work at an hourly wage of $15 per hour. a. Illustrate the worker’s opportunity set in a given 24-hour period. b. Suppose the worker is always willing to give up $11 of income for each hour of leisure. Do her preferences exhibit a diminishing marginal rate of substitution? How many hours per day will she choose to work?
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