Suppose that the production function is Y =9 x0 SN5 With this production function, the marginal product of labor is MPN = 45 K 5/N5 The labor supply curve is NS = 115x[(1 - 1)xw, where w is the real wage rate, t is the tax rate on labor income, and hence (1 - )xw is the after-tax real wage rate. The capital stock is K= 25. Assume that the tax rate on labor income, t, equals zero The equilibrium level of the real wage is 1.45 (Round your answer to two decimal places) The equilibrium level of employment is (Round your answer to one decimal place) Now, suppose the tax rate is changed to t 02. Now the equilibrium level of the real wage is (round your answer to two decimal places). With the tax rate now at t-0.2, the equilibrium level of employment is (round your answer to one decimal place)

9. Behavioral economics Indicate whether each of the following examples of behavior is consistent with the way the traditional economic framework suggests people should act, or if it is reserved for behavioral economists to examine. Example Some people would be willing to pay money to lower the incomes of others. Some people treat $60 they earn differently from $60 they win in a random drawing. Some people sacrifice disposable income to help their children pay for college. Some people would turn down a new, higher-paying job if it meant spending less time with their family. Consistent with the Predictions of Traditional Economic Models Reserved for Behavioral Economics

Question 7 (10 points) Listen Figure 2-7 HOURS WITHOUT SLEEP Refer to Figure 2-7. Taking cause and effect into account, which of the following interpretations would be most reasonable regarding the relationship between coffee and hours without sleep? The less coffee a person drinks per day, the more time he can go without sleep. There is no relationship betwveen how much coffee per day a person drinks and how long he can go without sleep. The more coffee a person drinks per day, the more time he can go without sleep. The more coffee a person drinks per day, the less time he can go without sleep. Question 8 (10 points) V Saved CUPS OF COFFEE PER DAY

5. (12) Max is stocking up on ice cream and cookies; ice cream costs $2 and cookies cost 50 cents ($.50). The marginal utility gained from each treat is given in the table below. If Max is a rational utility maximizer and has $8 to spend, how many of each treat will they purchase, and in what order? Show your work. Qice cream MU of ice Qcookies MU of cream cookies 1234567 40 1 9 32 2 9 26 3 7 18 4 5 8 5 3 6 6 3 4 7 1