Lorenzo has the following labour supply curve: Labour Supply LABOUR (Hours) between w3 and w1 between w2 and w1 above w1 The substitution effect of a higher wage outweighs the income effect when wages are lower than w2 fewer or more The substitution effect is the phenomenon that workers choose to work v hours when they are given a raise, because the opportunity cost of leisure has fallen the opportunity cost of leisure has risen they can afford to buy less leisure they can afford to buy more leisure WAGE RATE (Dollars per hour)

Strong income effect weakening and eventually eliminating the substitution effect explains why an individuals labor supply cure bends backward at high wage levels. True or galse

Edie chooses to work 90 hours per week when the wage rate is $16 per hour. If she is offered time-and-a-half ($24 per hour) for “overtime work” (i.e., hours in excess of 90 per week), will she choose to work longer hours? Support your results with a diagram.

Before the sick pay policy was instituted, teachers received no pay for days that they did not work. Consider a teacher who, prior to the introduction of sick pay, took 50 days of sick leave. According to labor supply theory, how will introduction of the sick pay policy described above change the amount of sick leave that this teacher takes? #1 Sick leave will increase because of substitution and income effects that reinforce each other. O Sick leave will increase because of a substitution effect. O Sick leave will not change. O Sick leave will increase because of an income effect. O The change in sick leave is indeterminate because of conflicting substitution and income effects.

Ab 6  Economics  To construct a house, Eric uses power tools (qK) and hires workers (qL). Power tool rental is $10 per hour, while each worker can be hired at a rate of $30 per hour. If the wage rate falls to $20, what is the value of the slope of the new isocost curve?

Use the table to answer the question that follows. Quantity of Labor MP of Labor Quantity of Capital MP of Capital   1    30         1    50   2    25         2     40   3    20         3     35   4    15         4     15   5    10         5      5 What combination of labor and capital would satisfy the input hiring rule that minimizes the cost of production, if the price of labor is $5 and the price of capital is $10?  A-1 unit of labor; 3 units of capital.  B-2 units of labor; 2 units of capital C-3 units of labor; 2 units of capital.   D-4 units of labor; 4 units of capital E-5 units of labor; 1 unit of capital

a) For an output level of 40 units, calculate the marginal rate of technical substitution between points A and B. b) Also for an output level of 40 units, calculate the marginal rate of technical substitution between points D and E

Ian works at an iron smelter in Pittsburgh, the center of iron production in America. Due to the difficulty in measuring the productivity of individual employees, Ian's employer as well as the other iron smelters all pay an efficiency wage. Adjust the wage line on the graph to reflect this situation. What characteristic of efficiency-wage jobs is not supported by the situation shown in the graph? Efficiency wage jobs result in a surplus of workers at the wage being offered. Elevated wages serve as an economic incentive to work harder. The wage rate will eventually return to the market-clearing level. Efficiency wages result in an increase in the rate of unemployment. Wage ($ per hour) Quantity of workers (in thousands) Wage S

If a 2​-percent increase in the price of corn flakes causes a 10​-percent decline in the quantity​ demanded, what is the elasticity of​ demand?

Ginny currently earns a    (a. nominal; b. real)    wage of $12.00 per hour; in other words, the amount of her paycheck each week is $12.00 per hour times the number of hours she works. Suppose the price of sparkling water is $2.00 per gallon; in this case, Ginny's    (a. real; b. nominal)   wage, in terms of the amount of sparkling water she can buy with her paycheck, is     (blank)      gallons of sparkling water per hour. When workers and firms negotiate compensation packages, they have expectations about the price level (and changes in the price level) and agree on a     (a. nominal; b. real)         wage with those expectations in mind. If the price level turns out to be higher than expected, a worker's     (a. real; b. nominal)     wage is   (a. lower; b. higher)      than both the worker and employer expected when they agreed to the wage.   Ginny and her employer both expected inflation to be 3% between 2012 and 2013, so they agreed, in a two-year contract, that she…