Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 17.3, Problem 1QQ
To determine
Does people work more or less in the increasing wage sector.
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4. Winona has 80 hours to divide between leisure and labor. Her utility function is u(r,c) =
f(r) + c, when r represents hours of leisure, c represents dollars of consumption, and fis
strictly concave. Winona's wage is wo = $15/hr. initially, then it rises to wi = $20/hr.
(i) Explain what happens to Winona's labor supply when the wage rises, and why.
(ii) Explain how the answer to (i) would change if Winona were to win a lottery.
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!
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.
Chapter 17 Solutions
Microeconomics
Ch. 17.3 - Prob. 1QQCh. 17.3 - Prob. 2QQCh. 17.3 - Prob. 3QQCh. 17.3 - Prob. 4QQCh. 17.A - Prob. 1ADQCh. 17.A - Prob. 2ADQCh. 17.A - Prob. 3ADQCh. 17.A - Prob. 4ADQCh. 17.A - Prob. 1ARQCh. 17.A - Prob. 2ARQ
Ch. 17.A - Prob. 3ARQCh. 17.A - Prob. 4ARQCh. 17.A - Prob. 1APCh. 17.A - Prob. 2APCh. 17 - Prob. 1DQCh. 17 - Prob. 2DQCh. 17 - Prob. 3DQCh. 17 - Prob. 4DQCh. 17 - Prob. 5DQCh. 17 - Prob. 6DQCh. 17 - Prob. 7DQCh. 17 - Prob. 8DQCh. 17 - Prob. 9DQCh. 17 - Prob. 10DQCh. 17 - Prob. 1RQCh. 17 - Prob. 2RQCh. 17 - Prob. 3RQCh. 17 - Prob. 4RQCh. 17 - Prob. 5RQCh. 17 - Prob. 6RQCh. 17 - Prob. 7RQCh. 17 - Prob. 1PCh. 17 - Prob. 2PCh. 17 - Prob. 3PCh. 17 - Prob. 4PCh. 17 - Prob. 5P
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- Paragraph Font Consider an individual who initially works T-L. hours per week, where (T-L)>0. They earn an hourly wage (W) and no non-labour income. a) Draw a graph that reflects this individual's income-leisure constraint, utility-maximizing indifference curve (U.) and choice of leisure hours (L.). b) The government then implements a wage subsidy program in which worker wages are increased by 10%. This wage subsidy program has no limits, so there is no phase-in/out. This wage subsidy produces both an income effect and a substitution effect on the worker's choice of leisure hours. Assume that the substÄ«tution effect is stronger than the income effect. On the same graph as part a, draw this individual's new income-leisure constraint, utility- maximizing indifference curve (U.) and choice of leisure hours (L). [Note: When incorporating the 10% wage subsidy into the graph in part b, I am not expecting perfect precision. Just try your best to draw the new income-leisure constraint asā¦arrow_forward4) The profit-maximizing quantity of labor equates the marginal product of labor with A) the average product of labor. C) the marginal product of capital. B) total factor productivity. D) the real wage. 5) The fact that indifference curves are downward sloping A) is not true. B) follows from the fact that more is preferred to less. C) follows from the property that the consumer likes diversity in his or her consumption bundle. D) follows from the property that consumption and leisure are normal goods. 6) The production function is concave in capital because A) the contribution to production of each additional unit of capital decreases. B) the marginal product of labor is decreasing. C) the cost of loans increases with their quantity. D) the marginal product of capital is increasing. 7) A static decision is one that A) involves planning over one time period. B) involves planning over exactly two time periods. C) is made very slowly. D) involves planning over more than one time period.arrow_forwardWhat is Job Match Quality? a. The marginal product associated with the match of a particular worker with a particular job. b. The average product associated with the match of a particular worker with a particular job. c. The total product associated with the match of a particular worker with a particular job. d. The joint product associated with the match of a particular worker with a particular job.arrow_forward
- (i) Keithās marginal utility of leisure is C ā 20 and his marginal utility of consumption is L ā 50. There are 110 hours in the week available to split between work and leisure. Keith receives Ā£250 of welfare payments each week regardless of how much he works (assume he spends all of his welfare payments on consumption). What is Keithās reservation wage? (ii) Suppose Danny receives the same welfare payments each week as Keith and has the same number of available hours (110). However, Dannyās indifference curve is flatter than Keithās. How would his reservation wage compare to Keithās? Why?arrow_forwardRefer to the following diagram. Point A is 24 hours, C is 14 hours, D is 8 hours, and E is 6 hours. Income Bā 0 D -Leisure If the current wage rate results in a budget constraint of AB2, how many hours will the individual work?arrow_forwardAnn has non-labour incomeĀ M; hourly wage rateĀ w. She can choose how many hours she works. She can use her income to purchase consumption, each unit of consumption has priceĀ p. (a) Initially, Ann decides not to work at all. Using a consumption-leisure diagram, explain her behaviour. (b) Now, her hourly wage rate increases toĀ wāĀ >Ā w. She decides to start working. Using an appropriate diagram, explain how she decides how many hours to work using substitution and income effects.arrow_forward
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