assume the following labor supply curves: 1. N = C + .64 W -2.33 I + 0.08 K 2. N = C + 1.33 W - .59 I - .28 K 3. N = C - 1.11 W - .59I - .28K a. Determine whether leisure is inferior in the 2nd labor supply curve. b. which if any of the above three equations represent back-bending labor supply curves? justify your answer.
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assume the following labor supply curves:
1. N = C + .64 W -2.33 I + 0.08 K
2. N = C + 1.33 W - .59 I - .28 K
3. N = C - 1.11 W - .59I - .28K
a. Determine whether leisure is inferior in the 2nd labor supply curve.
b. which if any of the above three equations represent back-bending labor supply curves? justify your answer.
c. which if any of the above three labor supply curves is inconsistent with theory? justify your answer.
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- Topic 5 Assignment. Consumption (Dollars) 2000 1800 1600 W=$16 1400 E 1200 W=$12 1000 B 800 W=$8 600 400 200 0 0 10 20 30 40 50 60 70 80 90 100 Leisure (Hours) If Valerie's labor-supply curve is upward sloping when the wage is between $8 and $12 per hour, then point optimum at a wage of $12 per hour. Given this optimum at a wage of $12 per hour, an optimum of point supply curve when the wage is between $12 and $16 per hour. on the graph represents a possible generates a backward-sloping labor- Grade Final StepMs Katrina has eighteen hours available per day to allocate between Leisure and work. She has N$100 non - labour income and her wage rate per hour is N$25.00. a) Contract budget constraint equation b) Draw a budget line and make sure to include intercepts c) Calculate the slope of the budget line d) If Ms Katrina's utility function is , what combination of Leisure hour and income that will help to maximize her utility?Emma is employed at a contract where he can vary his labour supply between 0 and 40 hours per week. She derives utility from consumption, c, and leisure, L. Her preferences are represented by the following utility function: U(c,L) = min(c, L). The unit price of consumption is p, and the hourly wage rate is w. (a) Derive an expression for Emma's labour supply. (b) The government contemplates introducing a consumption boosting policy including a monthly transfer of money for which Emma is eligible. At what size of the transfer will Emma decide to not work? Assume that the unit price of consumption is 30 and the hourly wage rate is 50
- Question Four a) TA worker chooses to work X hours per week, at a wage of $9 per hour. An overtime rate of $12 per hour is then offered, for hours in excess of 40; in this situation, the worker chooses to work Y hours per week. Finally, the $12 wage is offered for all hours worked, and the worker chooses to work Z hours per week. What can be said about the relationship between X, Y and Z (for example, is Y greater than Z)? Explain your answer in terms of income and substitution effects. b) College education is heavily subsidized by the governments. give an economic arguments for or against these subsidies.Q3. Consider a utility function with one consumption good q1 and one type of leisure q2a) Derive complete labour supply function.b) Under what condition the labour supply curve will be negatively sloped.SUBSTITUTION AND INCOME EFFECTS OF A WAGE INCREASE When the wage rate increases from $10 to $30 per hour, the worker's budget line shifts from PQ to RQ. In response, the worker moves from A to B while decreasing work hours from 8 to 5. The reduction in hours worked arises because the income effect outweighs the substitution effect. In this case, the supply of labor curve is backward bending. Income (dollars per day) 720 240 w= $30 w= $10 12 16 www. 19 Substitution Effect Income Effect Derive the graph into a backward bending labor supply curve Q 24 Hours of leisure
- Consider the labor–leisure budget constraint curve on the graph. This curve shows trade‑offs between income and leisure that must be made over the course of one week. Assume there are no artificial barriers to limits on hours worked and that the wage is $25 per hour. Determine the vertical and horizontal intercepts. vertical intercept: $ horizontal intercept: hAn 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?Suppose there is an increase in hourly wages. Describe how this change could affect labor supply responses at (i) the extensive margin and (ii) the intensive margin. Note: Try to be as comprehensive as possible with your explanation. Hint: In your explanation, utilize concepts such as "substitution effect" and "income effect." Furthermore, describe how your explanation would depend on whether leisure is assumed to be a normal good versus an inferior good.
- Cindy gains utility from consumption C and leisure L. The most leisure she can consume in any given week is 168 hours. Her utility function is U ( C, L) = C x L. This functional form implies that Cindy’s marginal rate of substitution is C/L. Cindy receives $630 each week from her great-grandmother—regardless of how much Cindy works. What is Cindy’s reservation wage?Consider the following labor-leisure choice model. Utility function over consumption (C) and leisure (L) U(C.L) = (1/3L1/3 Total hours: H = 40 Labor hours: NS = H - L Non-labor income: π = 30 Lumpsum tax: T = 10 Hourly wage: w = 4 Suppose the hourly wage changes to w = 3. What is the substitution effect of this change on labor supply? A. +2.65 B. -2.65 C. +3.48 D.-3.48 E. None of the above(Based on Chapter 2, Problem 1 of Benjamin et al., 2031) Amit has $2000 of annual non-labour income. He has 80 hours per week that he can allocate between labour and leisure, for 80 x 52 = 4160 hours per year. His current wage rate is $20 per hour and he chooses to work 2200 hours a year. (a) Draw a leisure - labour diagram, clearly indicating Amit's current labour supply decision. (Your diagram should be clearly labeled and include Amit's budget line and an indifferent curve showing his leisure and consumption of goods and services at his optimal choice. Use the figures provided to find the y-intercept and his consumption if he doesn't work.) (b) Amit's wage rate increases to $25 per hour. In response, he increases his labour supply to 2300 hours. If he were "compensated" accordingly, at this new wage rate he would be just indifferent to working 2200 hours at his original wage rate and working 2400 hours at the new wage. Illustrate Amit's new optimal choice. Use the information…