Microeconomics
13th Edition
ISBN: 9781337617406
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 13, Problem 5WNG
To determine
Compare the two demand curves.
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if leisure is an inferior good, what can you say about the slope of the labor supply curve?
Why might a labor supply curve be backward bending? Explain your answer using the concepts of the income effect and the substitution effect. (You can explain your answer using words or you can draw a graph accompanied with a brief explanation)
Q. 1
Analyze and graph the Product Effect and the Substitution Effect in labor demand in the face of an increase in labor price.
Chapter 13 Solutions
Microeconomics
Ch. 13.1 - Prob. 1STCh. 13.1 - Prob. 2STCh. 13.1 - Prob. 3STCh. 13.1 - Prob. 4STCh. 13.2 - Prob. 1STCh. 13.2 - Prob. 2STCh. 13.2 - Prob. 3STCh. 13.2 - Prob. 4STCh. 13 - Prob. 1QPCh. 13 - Prob. 2QP
Ch. 13 - Prob. 3QPCh. 13 - Compare the firms least-cost rule with how buyers...Ch. 13 - Prob. 5QPCh. 13 - Prob. 6QPCh. 13 - Prob. 7QPCh. 13 - Prob. 8QPCh. 13 - Prob. 9QPCh. 13 - Prob. 10QPCh. 13 - Prob. 11QPCh. 13 - Prob. 12QPCh. 13 - Prob. 13QPCh. 13 - Prob. 14QPCh. 13 - Prob. 15QPCh. 13 - Prob. 16QPCh. 13 - Prob. 1WNGCh. 13 - Prob. 2WNGCh. 13 - Prob. 3WNGCh. 13 - Prob. 4WNGCh. 13 - Prob. 5WNG
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- Consider the following model of labour supply. There is a representative worker with the following utility function: U(C,L) = C + 3L The budget constraint and time constraint are: C = wh + V h = T – L where w = 1,V = 500,T = 100. The notation is the same as question 1. a) Calculate the optimal leisure and consumption. b) Explain why we usually do not use this type of utility function to model the labour supply.arrow_forwardIf you increase the total amount of labor, the labor constraints curve becomes flatter. true or falsearrow_forwardAssume a firm is trying to produce q0 units of output at the lowest total cost. The wage decreases, rotating the isocost line as shown in the below graph. Make the necessary changes to the graph to show the input combination that will now produce q0 at the lowest total cost. Make sure you show the new levels of labor and capital.arrow_forward
- Supply: Thinking Like a Seller - End of Chapter Problem Jerome is working as an IT consultant. His individual labor supply curve is given in the accompanying graph. Jerome decides to enroll in college and will begin taking classes next semester. Make the appropriate change to the graph to show the most likely effect on Jerome's labor supply curve of his decision to attend college. If Jerome's decision to attend college results in a change in supply, shift the supply curve appropriately, but leave the wage line unchanged. If Jerome's decision to attend college results in a change in quantity supplied, adjust the wage line appropriately, but leave the supply curve unchanged. Wage Jerome's individual labor supply curve Wage Quantity Supplyarrow_forwardConsider an economy with 20 workers. If the marginal product of labor (MPL) is 13 and the market price (P) is $6, what isthe value of the marginal product of labor (VMPL)? Provide your answer below:arrow_forward1. Computing labor productivity and its relationship to the demand for labor Sizzler's produces charcoal grills in a small manufacturing facility and sells the grills in a competitive market. The following table presents the company's production function: Labor (Number of workers) 0 OUTPUT (Grills) 400 360 Use the blue points (circle symbol) to plot the production function for Sizzler's on the following graph. 240 200 160 120 80 40 0 1 0 2 3 4 5 Output (Grills) 0 95 185 260 320 355 1 3 LABOR (Number of workers) Production Functionarrow_forward
- The lines on the graph are budget constraints, showing the tradeoff between labor and leisure. Suppose that when the wage changes, an individual chooses to move from point A to another point on the graph. For each of the other points, where would it belong on the backward bending labor supply curve? Backward‑bendingportionVerticalportionUpward‑slopingportion Answer Bank B D F C Earrow_forwardIf the substitution effect of a wage change outweighs the income effect of a wage change, the labor-supply curve is A) horizontal. B) upward sloping. C) vertical. D) backward bending.arrow_forwardWhat is the value marginal product of labor if: P = $10, MPL = $25, and APL = 40?arrow_forward
- You are given a scenario where this a change in a factor of production or a change in demand for an item. You need to explain in sentence form how this would change demand for labor. You develop a popular video game and continue to develop new versions to keep people interested in the game.arrow_forwardConsider an economy with 2 workers. If the value of the marginal product of labor (VMPL) is $50 and the marginal product of labor (MPL) is 15, what is the market price (P)? Provide your answer below:arrow_forwardTim works 51 hours per week, and his wage is $20 per hour. If his wage increases to $40 per hour, and his labor supply curve is downward-sloping, this means:arrow_forward
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