Reference no: EM13898308
A person can choose to work any amount from 0 to 52 weeks per year at a wage of $1000 per week.
a. Draw her annual budget constraint, representing total annual consumption versus annual weeks of leisure.
For each of the scenarios below, indicate whether the proposed change will increase or decrease the number of weeks that this person will work, or if the effect is uncertain. Justify your answer by stating whether the change in the budget constraint leads to an income effect, a substitution effect, or both, and draw the new budget constraint.
b. The government imposes a flat wage tax of 10 percent.
c. The government imposes a progressive tax in which a person’s first $20,000 of income is not taxed at all and any income they earn above $20,000 is taxed at a rate of 20 percent.
d. The government implements a welfare program in which the welfare system pays $5000 per year to people with no labor market earnings, but benefits are reduced by $1 for each $1 in labor market earnings that a person receives (so that people who earn over $5000 per year do not receive any welfare benefits).
e. The government implements a welfare program in which the welfare system pays $5000 per year to people with no labor market earnings, but benefits are reduced by $0.50 for each $1 in labor market earnings that a person receives.
|
Total annual consumption vs annual weeks of leisure
: A person can chose to work any amount from 0 to 52 weeks per year at a wage of $1000 per week. Draw her annual budget constraint, representing total annual consumption vs annual weeks of leisure.
|
|
What would be its equilibrium profit
: A monopolistic firm faces the following demand curve. Q = 7800 -12 P This monopoly's cost function has been estimated as follows: TC = 460,000 + 50 Q. What price should this monopoly charge to maximize its profit? What would be its equilibrium profit..
|
|
Find the optimal ratio of leisure to consumption
: Adam Sandler has a utility function U(C, L) = C1/3L1/2. The wages now available to him are $9/hr. Non-wage income in royalties are $6 a day. Find the MRS for Leisure to Consumption to find the optimal ratio of Leisure to Consumption. Write out and dr..
|
|
The utility function of worker is represented
: The utility function of a worker is represented by U(C,L) = C×L. Suppose this person currently has 100 hours of leisure and $1200 in consumption in a given time period. What must the worker’s hourly wage rate be if she is maximizing her utility?
|
|
Draw her annual budget constraint
: A person can choose to work any amount from 0 to 52 weeks per year at a wage of $1000 per week. Draw her annual budget constraint, representing total annual consumption versus annual weeks of leisure.
|
|
Estimated costs functions to make productions decisions
: In 1796, Gottfried Christoph Hartel, a German music publisher, calculated the cost of printing music using an engraved plate technology and used these estimated costs functions to make productions decisions.
|
|
Economic indicators-events that resulted in this loss
: Choosing a long position on the USD/CHF (Us dollar/Swiss Franc) resulted in a loss over the past month. What in the past 2 months (September/October) could have been economic indicators/events that resulted in this loss? What would be any factors tha..
|
|
Given the market for corn in equilibrium
: Given the market for corn in equilibrium, show the effect on price and quantity of the following simultaneous occurrences: Good weather results in a 10% increase in the harvest of corn. A medical report is published that concludes that consumption of..
|
|
Backward bending then leisure is an inferior good
: If an individual’s labor supply curve is backward bending then leisure is an inferior good (i.e., a backward bending supply curve means downward sloping for some values of the wage).
|