Draw a consumption-leisure diagram, carefully illustrating Bill's current labour supply decision. Mak sure to calculate all relevant values and label all axes b
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- Ann has non-labour income M; hourly wage rate w. She can choose how many hours she works. She can use her income to purchase consumption, each unit of consumption has price 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 to w’ > w. She decides to start working. Using an appropriate diagram, explain how she decides how many hours to work using substitution and income effects.KA. Ann has non-labour income M; hourly wage rate w. She can choose how many hours she works. She can use her income to purchase consumption, each unit of consumption has price 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 to w’ > w. She decides to start working. Using an appropriate diagram, explain how she decides how many hours to work using substitution and income effects.JosephmigratedtoCanadafromGhana5yearsago.Hecurrently works in sales but is considering quitting work for two years to earn an MBA degree. His current job pays $40,000 per year (after taxes), but he could earn $55,000 per year (after taxes) if he had an MBA. Tuition is $10,000 per year, and the cost of an apartment near campus is equal to the $10,000 he is currently paying. His discount rate is 6 percent per year. He just turned 48 and plans to retire when he turns 60, whether or not he earns his MBA degree. Based on this information, should he go for an MBA degree? Explain carefully with appropriate calculations.
- 5. Suppose that John could work 365 days per year and could earn $200 per day for each day he worked. a. Draw his budget line with respect to his labor-leisure tradeoff b. Suppose that John chooses to work 200 days per year. Draw the appropriate indifference curve, and not his equilibrium wage income and labor-leisure choices c. Suppose that John’s wage rises to $210 per day. Show how his equilibrium level of income and labor-leisure will change. d. Suppose John is ill ten days per year. Draw the impact of this illness on the equilibrium above. How will it change his equilibrium allocation of earnings and labor vs. leisure?The next 3 questions deal with the following situation. Jennifer has a home business selling women's headscarves. She earns $3,000 per month in rev- enue, and spends $500 per month on materials. She also hires a part-time worker, whom she pays $500 per month in hourly wages. Utilities cost $400 per month. Finally, she spends $100 per month maintaining a quality web- site, which she uses to conduct internet marketing. 13. What is Jennifer's variable cost of production? (A) $1,500. (B) $1,400. (C) $1,000. (D) $100. 14. What is Jennifer's accounting profit? (A) $1,500. (B) $1,000. (C) $2,000. (D) $3,000. 15. Suppose that if Jennifer were not running her headscarves business, she could make $2,000 per month working in retail. What is her economic profit? (A) $1,500. (B) -$1,000. (C) -$500. (D) $2,000.4. 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.
- 1) What would be the substitution effect and the income effect of a wage increase? 2) What do you think accounts for the wide range of savings rates in different countriesJordan's Labor Choices 230 --M-Budget Line -0-11 612 210 200 190 180 170 160 150 140 130 ho 100 90 B0 po 50 50 40 30 20 10 15 20 Hours of Leisure Jordan's labor choices are illustrated in the graph above. The wage rate is $14/hour, the price of consumption units is $1 per unit. How many hours will Jordan work? Units of Consumption6. If leisure is an inferior good, what can you say about the slope of the labor supply curve?
- 6. Suppose that the representative consumer's div- idend income increases, and his or her wage rate falls at the same time. Determine the effects on consumption and labor supply, and explain your results in terms of income and substitution effects.Title 1. Suppose that the indifference curves between consumption and leisure are concave to the origin.... Description 1. Suppose that the indifference curves between consumption and leisure are concave to the origin. How many hours will a person allocate to leisure activities? 2. Suppose that the price of goods purchased in the marketplace rises. What is the impact of this price increase on the worker's reservation wage, on the worker's probability of entering the labor force, and on hours of work? 3. What happens to a worker's desired hours of work if employers pay an overtime premium equal to "time and a half'(that is, 1 .5 times the straight-time wage) for any hours worked in excess of 40 hours? What would happen to hours of work if the overtime premium were raised to double the straight-time wage?A person is a gig worker and can choose whether and how much he works each day. If he does work, his hourly wage is $20 per hour. Today he decides to work 8 hours. 1. He chooses point (enter A, B or C). 2. The value for W is| (enter whole numbers without the comma). 3. The value for X is 4. He consumes hours of leisure. Enter whole numbers without decimal points or dollar signs, e.g. enter $30,000 as 30000. Income/Consumption IC TC, 24 Leisure Today (hours) SO
