Economics (Irwin Economics)
Economics (Irwin Economics)
21st Edition
ISBN: 9781259723223
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 17.3, Problem 1QQ
To determine

Does people work more or less in the increasing wage sector.

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Helping America’s seniors. Suppose that the government proposes eliminating any tax on earnings from work which are less than $20,000 for Americans at least 62 years old. Seniors earning more than this threshold would still be subject to the normal income tax rates on higher earnings.   a. Sketch a budget constraint in the leisure-income diagram consistent with this proposal.   b. If the proposal were adopted, what do you predict would happen to the labor supply of seniors? Explain.
4. Steve's utility funetion over leisure and consumption is given by u(L,Y) = min (3L, Y). Wage rate is w and the price of the composite consumption good is p = 1. (a) Suppose w = 5. Find the optimal leisure - consumption combination. What is the amount of hours worked? (b) Suppose the overtime law is passed so that every worker needs to be paid 1.5 times their current wage for hours worked beyond the first 8 hours. Will this law induce Steve to work more hours? If so, how many? If not, explain.
On a backward-bending labor supply curve, which part of the curve has a negative slope will appear: (A). Workers will offer additional hours of work if wages fall.(B). The income effect dominates the substitution effect.(C). The worker budget line does not tangent the indifference curve.(D). Answers (A) and (B) are correct.(E). All answers (A), (B), and (C) are correct. Choose one of the answers from the five choices provided. And please, also provide a brief description, explanation or argument for your choice. Thank you Bartleby!
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