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Problem 1:
(a) In what specific ways does Becker's model of the allocation of time differ from the simple work-leisure choice model?
(b) Compare and contrast the functioning of the income and substitution effects of the two models.
Problem 2:
(a) The monopoly union model assumes that union sets wage rate while the firm sets the level of union employment, based on this wage rate. Using appropriate equations and diagram, explain carefully the functioning of the monopoly union model.
(b) Comment on the direct and indirect test of the Efficient Contract model
Suppose that historically, the proportion of people who trade in their old car to a car dealer when purchasing a new car is 48%. Over the previous 6 months, in a sample of 115 new-
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what is production analysis?
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Suppose a firm’s budget were large enough to employ 100 units of either labor or capital, the cost of a unit of labor being the same as a unit of capital. The production function i
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