EBK MICROECONOMICS
5th Edition
ISBN: 9781118883228
Author: David
Publisher: YUZU
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Question
Chapter 5, Problem 5.30P
To determine
Whetherthe consumer's supply of labor curve is backward bending or not is to be determined.
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Check out a sample textbook solutionStudents have asked these similar questions
If the consumer's non-labor income increases while wages remain unchanged, what will
happen to the budget line?
A) The budget line shifts inward without a change in slope.
B) The budget line rotates inward from the intercept on the horizontal axis.
C) The budget line rotates outward from the intercept on the vertical axis.
D) The budget line shifts outward without a change in slope.
An optimum labor-leisure that occurs as a corner solution
A) can be an equilibrium in the aggregate economy.
B) includes the consumption of only one good.
C) cannot exhaust the budget constraint.
D) includes the exact same amounts of each good.
) If a firm is a price taker in both the labor market and the output market, it will
A) hire labor until the marginal product of labor equals the output price.
B) hire labor until the marginal product of labor equals zero.
C) earn zero economic profit in the short run.
D) hire labor until the marginal product of labor equals the wage rate.
An individual values both consumption and leisure.
Suppose the individual has 1600 hours per week they
can allocate between leisure and work. IF the individual
works, they make a wage of $25 per hour. The
individual's utility function is given as a function of
leisure time, L and consumption, c: U(L, c) = L^(1/2)c
^ (1/2) a) Draw the individual's budget constraint for
leisure and consumption. b) How much leisure time will
the individual have when utility maximizing? c)
Consider a Universal Basic Income policy like the one
proposed by Andrew Yang that would give all
individuals a lump -sum, unconditional cash transfer of
$1,000 each month. How much leisure time will the
individual have when utility maximizing with the cash
transfer? d) Now suppose, instead of a cash transfer, a
minimum wage of $40 per hour is implemented. How
much leisure time will the individual have when utility
maximizing with the cash transfer? e) What change in
leisure time can be attributed to the substitution…
Ivan faces a labor supply decision. His well-behaved preferences over the two goods "hours of leisure' L and 'consumption' c can be represented by u= 4(L)1/2 +c. He has no non-labor income and can choose how many hours to work at the wage rate u per hour. The price per unit of consumption is p, and his available free time is T hours
.a) Sketch Ivan's budget set, with axes, intercepts, and slope labeled (these will depend on the parameters w, p, and T)
.b) Use the tangency method to find Ivan's demand functions for leisure and consumption (as functions of u, p. and T)
.c) Let's think about Ivan's "time expansion path" (that is, the analog of the income expansion path a.k.a. income-consumption loci but for changes in T). Sketch it and explain why it has this shape. with reference to Ivan's demand functions.d) In terms of parameters from the model, what is the most that Ivan would be willing to pay to have an extra hour of free time (that is, to increase T by 1)? Why?
Chapter 5 Solutions
EBK MICROECONOMICS
Ch. 5 - Prob. 1RECh. 5 - Prob. 2RECh. 5 - Prob. 3RECh. 5 - Prob. 4RECh. 5 - Prob. 5RECh. 5 - Prob. 6RECh. 5 - Prob. 7RECh. 5 - Prob. 8RECh. 5 - Prob. 9RECh. 5 - Prob. 10RE
Ch. 5 - Prob. 5.1PCh. 5 - Prob. 5.2PCh. 5 - Prob. 5.3PCh. 5 - Prob. 5.4PCh. 5 - Prob. 5.5PCh. 5 - Prob. 5.6PCh. 5 - Prob. 5.7PCh. 5 - Prob. 5.8PCh. 5 - Prob. 5.9PCh. 5 - Prob. 5.10PCh. 5 - Prob. 5.11PCh. 5 - Prob. 5.12PCh. 5 - Prob. 5.13PCh. 5 - Prob. 5.14PCh. 5 - Prob. 5.15PCh. 5 - Prob. 5.16PCh. 5 - Prob. 5.17PCh. 5 - Prob. 5.18PCh. 5 - Prob. 5.19PCh. 5 - Prob. 5.20PCh. 5 - Prob. 5.21PCh. 5 - Prob. 5.22PCh. 5 - Prob. 5.23PCh. 5 - Prob. 5.24PCh. 5 - Prob. 5.25PCh. 5 - Prob. 5.26PCh. 5 - Prob. 5.27PCh. 5 - Prob. 5.28PCh. 5 - Prob. 5.29PCh. 5 - Prob. 5.30PCh. 5 - Prob. 5.31PCh. 5 - Prob. 5.32PCh. 5 - Prob. 5.33P
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