Figure below illustrates the effects of an increase inn-T for the consumer in a one-period work-leisure model. Which of the following statements correctly explains the entire effects of an increase in n- T? Leisure, I O A. budget line shift out, slope unchanged, increases consumption, increases labor supply implying a combination of income and substitution effects. O B. budget line out shift, slope unchanged, increases consumption, reduces labor supply implying a pure income effect. OC. budget line shift out, slope unchanged, increases consumption, decreases leisure implying a pure substitution effect. O D. budget line shift out in parallel to FJD, slope unchanged, decreases consumption, decreases leisure thus, neither a pure income effect nor a pure substitution effect. Consumption, C

Figure below illustrates the effects of an increase inn-T for the consumer in a one-period work-leisure model. Which of the following statements correctly explains the entire effects of an increase in n- T? Leisure, I O A. budget line shift out, slope unchanged, increases consumption, increases labor supply implying a combination of income and substitution effects. O B. budget line out shift, slope unchanged, increases consumption, reduces labor supply implying a pure income effect. OC. budget line shift out, slope unchanged, increases consumption, decreases leisure implying a pure substitution effect. O D. budget line shift out in parallel to FJD, slope unchanged, decreases consumption, decreases leisure thus, neither a pure income effect nor a pure substitution effect. Consumption, C

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Theory Of Consumer Choice

Section: Chapter Questions

Problem 1PA

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Why does a change in income cause a parallel shift in the budget constraint?
Pls help with thsi question I am stuck Given the image attatched: 1.Given the above Marginal Utilities and prices to form the optimality condition for utilitymaximization. According to this optimality condition, what must be the ratio of Films toBooks in an optimal consumption bundle? 2. Given your answer to Q9, what must be the household’s optimal consumption of F & Bgiven their income (m)? 3. Suppose that the price of Films changed from $2 to $4. What would need to happen tothe MRS according to the optimality condition in Q9 if the household wanted to keepmaximizing its utility?
Consider Alexei who makes $1,400 per week and just won a ‘set for life’ lottery ticket whichinvolves a fortnightly payment of $10,000 for 20 years. Currently he works 35 hours per week. Nowdo the following:• Illustrate the effect of the lottery win on Alexei’s budget constraint using a fully labelleddiagram where i) the horizontal axis represents the hours of free time per week, and ii) thevertical axis represents Alexei’s weekly consumption.• Illustrate on the same diagram Alexei’s optimal decisions before and after the lottery winalong with his indifference curves.
7. Consider a generic consumption/leisure choice. How will the follow ing events/policies affect either the consumer's choice of hours worked and labor supply, if at all? Be specific as possible about income and substitution effects and if there are multiple cases, consider them all (a) A raise in the wage rate (b) A labor income tax on all income. (c) A labor income tax on all labor income beyond the first 20 hours.
My Moodle My Favou tion 6 An individuals utility function is given by ret rered U = 340x1 + 960x2 + 2x1x2 – 2a- a/2, ed out of when the weekly amount of leisure is x1 132 and earned income is 12 = 760 answer the following: 1. The marginal utility of x1 is ag tion 2. The marginal utility of x2 is 3. Use the small increments formula to estimate the change in the utility when r1 decreases by 1 and x2 increases by 4. The change = 4. Does the law of diminishing marginal utility hold? 5. The MRCS at a given values is Enter non-integer numerical values as decimals to at least 3 decimal places. Note: you must use a. and not , for a decimal point. Next page revious page Mock paper ► - Working from video in SVG Jump to... format
Problem Set 1. A firm's production function is º=50L-0.01Ľ' , where L denotes the size of the workforce. Find the value of MP in the case when: (a) L=1, (b) L=10, (c) L=100, (d) L=1000 Does the law of diminishing marginal productivity apply to this particular function? 2. Show that the price elasticity of demand is constant for demand functions of the form A P = Q" where A and n are positive constants. 3. The demand and total cost functions of a good are respectively 4P+Q-16=0 and ТС %3D 4 + 20 — 10 20 a) Find expressions for TR, (profit) 1 , MR, and MC in terms of Q. b) Solve the equation dn = 0 ÕP and hence determine the value of Q which maximizes profit. c) Verify that, at the point of maximum profit, MR=MC. 4. The cost of building an office complex, x floors high, in a prime location in Accra is made up of three components: (a) GH¢10 million for the land (b) GH¢'/, million per floor (e) Specialized costs of GH¢10000× per floor. How many floors should the office complex contain if…
Principles of Economics 1 | S1 21/22 Time left 0:5) When the price of one good increases and the price of the other good and income are held constant, the budget line Select one: shifts parallel to the original budget line so that the new budget line is farther from the origin O b. shifts parallel to the original budget line so that the new budget line is closer to the origin rotates so that the intercept is farther from the origin on the axis representing the good that has experienced an increase in price O a. O c. O d. rotates so that the intercept is closer to the origin on the axis representing the good that has experienced an increase in price Next page
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