Which effect dominates other-substitution or income effect

Assignment Help Microeconomics

Reference no: EM13222462

In labor markets, a change in wages has both an income and a substitution effect. An increase in wages causes an increase in real income; at the same time, the relative price of leisure increases for the worker. Supposse that an increase in the wage rate causes an individual to work less. In this case, which effect dominates the other, the substitution or the income effect? (Hint: Think about the impact that each effect has on the quantity- hours of work and compare. The net effect substitution effect plus income effect on working hours is negative).

Reference no: EM13222462

Questions Cloud

Estimate the annual carrying cost per item : Since you learned about the EOQ model in class, you want to compare your plan to order 100 units at a time with an EOQ solution. Assume that there are 365 working days a year and that lead time is 14 days. Consider only the inventory costs and ans..

Determine the volume of a unit cell of diamond : The volume of a unit cell of diamond is .9454 nm^3 and the density of diamond is 3.52 g/cm^3. find the number of carbon atoms in the unit cell of diamond

What are some possible flows between e and lf : Consider a hypothetical labor force dynamics scenario for the month of November 2010. The stocks are the following: unemployed (U) = 5 million, employed (E) = 10 million, and Not-in-the- LF (~LF) = 3 million. From the beginning of November to the ..

Explain hexagonal closest-packed structure : An interstitial allow was prepared from two metals. Metal A with the larger atomic radius has a hexagonal closest-packed structure. What is the formula of the alloy if atoms of metal B occupy the following?

Which effect dominates other-substitution or income effect : In labor markets, a change in wages has both an income and a substitution effect. An increase in wages causes an increase in real income; at the same time, the relative price of leisure increases for the worker. Supposse that an increase in the wa..

What is the process specification : Studies on a bottle filling machine indicates it fill bottles to a mean of 16 ounces with a standard deviation of 0.10 ounces. What is the process specification, assuming the Cp index of 1?

What is the optimal delivery price to each customer : what is the optimal delivery price to each customer if topoil aggregates each shipments to each of the three customers on every truck that goes to nashville? what is the total annual transportatioin and hlding cost? how many days of inventory are ..

Determine the vapor pressure of pure water : The vapor pressure of water above this solution is found to be 0.3630 atm at 348.0 K . The vapor pressure of pure water at this temperature is 0.3804 atm.

Which schedule finishes sooner : The table below highlights the time taken in hours for (1) cutting and sewing and (2) delivery of each of the suits. Which schedule finishes sooner: First-come, first-served (123) or a schedule using Johnson's rule?

User Account

All Pages