Exercise 15.2 and Exercise 15.3 asked you to describe the labor-leisure tradeoff for Jonathon. Since, in the first example, there is no monetary incentive for Jonathon to work, explain why he may choose to work anyway. Explain what the
Trending nowThis is a popular solution!
Chapter 15 Solutions
PRINCIPLES OF MICROECONOMICS (OER)
Additional Business Textbook Solutions
Construction Accounting And Financial Management (4th Edition)
Cost Accounting (15th Edition)
Managerial Accounting (4th Edition)
Horngren's Accounting (11th Edition)
Managerial Accounting (5th Edition)
Financial Accounting (12th Edition) (What's New in Accounting)
- Lance lives in Williston, North Dakota. The firms in town, such as the Walmart, pay teenagers without a high school degree the federal minimum wage of $7.25 an hour. Because his parents provide him Y (mostly in the form of room and board), Lance chooses to stay in school and not work. However, a new fracking firm starts production nearby so the wage rises to three times the minimum wage. Use a labor-leisure choice figure to show why he does not work initially but then works a substantial number of hours at the higher wage. Draw Lance's original budget constraint and show that he does not choose to work. The firms in town, such as the Walmart, pay teenagers without a high school degree the federal minimum wage of $7.25 an hour. Assuming the price of consumption is $1.00, what is the slope of Lance's original budget constraint? The slope of Lance's original budget constraint is places.) (Round your response to two decimal Carrow_forwardWhat is two factors that may influence the shape of individuals’ indifference curves (flat or steep) which reflect their preferences for work or leisure? What is the difference between income effect and substitution effect under the basic work-leisure decision model?arrow_forwardDebbie is about to choose a career path. She has narrowed her options to two alternatives. She can become either a marine biologist or a concert pianist. Debbie lives two periods. In the first, she gets an education. In the second, she works in the labor market. If Debbie becomes a marine biologist, she will spend $15,000 on education in the first period and earn $472,000 in the second period. If she becomes a concert pianist, she will spend $40,000 on education in the first period and then earn $500,000 in the second period.a. Suppose Debbie can lend and borrow money at a 5 percent rate of interest between the two periods. Which career will she pursue? What if she can lend and borrow money at a 15 percent rate of interest? Will she choose a different option? Why?b. Suppose musical conservatories raise their tuition so that it now costs Debbie $60,000 to become a concert pianist. What career will Debbie pursue if the interest rate is 5 percent?arrow_forward
- An individual's decision to supply her labor or to spend her time in leisure activity is known as the labor-leisure tradeoff. True or false?arrow_forwardMike’s utility function for consumption and leisure is U=CL and T=168. Mike earns $10 per hour. What is Mike’s optimal amount of C and L? If the government starts a welfare policy that pays B dollars to all nonworkers and $0 to all worker, at what value of B will Mike find it optimum being out of the labour force in order to go on welfare?arrow_forwardA worker in Arizona had previously been working 40 hours/week and earning $400/week. The worker loses his job due to the coronavirus pandemic. He qualifies for unemployment compensation under Arizona law. Specifically, the individual is entitled to 50% of his previous wages up to a maximum of $240/week. The federal government votes to supplement the state unemployment with an additional $600/week. Show the person's leisure and consumption on the graph in response to losing his job. Make sure you label the new budget line, indifference curve, and leisure and consumption.arrow_forward
- George divides his time between two jobs: • a landscape assistant which pays $20 per hour for as many hours as he chooses to work. • a customer service representative where he is tasked with finding households who want to install solar panels. The company pays him $5 for each household that signs a contract. The number of households George can get to sign up for solar panels depends on how many hours he devotes to the task as noted in the table below. Customers Hours per day signed per day 11 3 15 14 |18 20 The marginal cost of spending one hour getting customers to sign up for solar panels is equal to $4 The marginal benefit of spending one hour getting customers to sign up for solar panels is equal to $ To earn the most income per day, his best choice is to spend not more than hours getting customers to sign up for solar panels. Enter whole numbers in each blank.arrow_forwardConsider two workers with identical preferences, Phil and Bill. Both workers have the same life cycle wage path in that they face the same wage at every age, and they know what their future wages will be. Leisure and consumption are both normal goods. a. Compare the life cycle path of hours of work between the two workers if Bill receives a one-time, unexpected inheritance at the age of 35. b. Compare the life cycle path of hours of work between the two workers if Bill had always known he would receive (and, in fact, does receive) a one-time inheritance at the age of 35.arrow_forwardTrue or False. Explain why. Deniz’s preferences for consumption and leisure is as follows:U(C,L)=C2LDeniz has 100 hours in the week available to split between work and leisure. She earns $10 per hour after taxes. She also receives $260 worth of welfare benefits each week. Deniz’s optimal amount of leisure time will be 45 whereas labour supply will be 55.arrow_forward
- Internships are considered a vital stepping stone to full-time employment after college, but not all internship positions are paid. Suppose you have to decide between taking an unpaid summer internship in your field of study, or working at a factory for the summer earning $10 an hour. If you take the factory job for the summer, what is included in your opportunity cost? Choose one or more: A. gaining valuable experience and increasing your human capital B. networking with professionals in your field of study C. the wages you make at the factory 7 OF 18 QUESTIONS COMPLETED 20 F4 See Hint ▶11 SUBMIT Aarrow_forwardMaria earns $15 per hour in her current job and works 40 hours a week. Her disutility of effort is measured as $1 per hour of work. In the case that she loses her job, she receives $5 per hour unemployment benefit. Additionally, being unemployed has psychological and social costs which is a disutility equivalent to $2 per hour. Which of the following statements is correct? Include a brief explanation (one sentence and/or equation) to justify why each statement is correct or incorrect. A). Her employment rent per hour is $3. B). If she can get another job with the same wage rate and weekly hours after 44 weeks of being unemployed, Maria’s total employment rent is more than $10,000. C). If the unemployment benefits she could receive if she lost her job increased to $7/hour, her employment rent would also increase. D). If her disutility of effort at her current job increased to $4/hour, her employment rent increases.arrow_forwardPresently, there is a minimum and maximum social security benefit paid to retirees. Between these two bounds, a retiree’s benefit level depends on how much she contributed to the system over her work life. Suppose Social Security was changed so that everyone aged 65 or older was paid $12,000 per year regardless of how much she earned over her working life or whether she continued to work after the age of 65. How would this likely affect hours worked of retirees?arrow_forward
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education