Maria can work up to 40 hours per week at Sparkle, one of many competitivefirms that make and sell hand-crafted jewelry and pay $25 per hour. Thebudget constraint below shows the tradeoff that she faces in terms of earningsversus leisure each week.S earnings$1,000Maria's weekly budget constraint40leisure (hours) B. If Maria were to work more hours in response to the higher tax, does thismean that leisure must be an inferior good for Maria? Use economic conceptsto explain:Assume government officials decide to drop their proposal to raise taxes onworkers like Maria.C. It turns out that making beaded bags requires job skills similar to those ofhand-crafted jewelry workers. But, in contrast to firms producing hand-craftedjewelry, firms producing beaded bags offer their workers paid vacation days.What wage do you think firms in the beaded bag industry pay? Explain yourreasoning using economic concepts:

maria can work only 40 hours a week. at sparkle she is earning $25 per hours . which means, if she…

Answered: B. If Maria were to work more hours in…

B. If Maria were to work more hours in response to the higher tax, does this mean that leisure must be an inferior good for Maria? Use economic concepts to explain:

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Theory Of Consumer Choice

Section: Chapter Questions

Problem 9PA

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Question

Maria can work up to 40 hours per week at Sparkle, one of many competitive
firms that make and sell hand-crafted jewelry and pay $25 per hour. The
budget constraint below shows the tradeoff that she faces in terms of earnings
versus leisure each week.
S earnings
$1,000
Maria's weekly budget constraint
40
leisure (hours)

B. If Maria were to work more hours in response to the higher tax, does this
mean that leisure must be an inferior good for Maria? Use economic concepts
to explain:
Assume government officials decide to drop their proposal to raise taxes on
workers like Maria.
C. It turns out that making beaded bags requires job skills similar to those of
hand-crafted jewelry workers. But, in contrast to firms producing hand-crafted
jewelry, firms producing beaded bags offer their workers paid vacation days.
What wage do you think firms in the beaded bag industry pay? Explain your
reasoning using economic concepts:

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