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Labor Economics, multiple choice questions
1. In the leisure-income model, the wage constraint shows a. the points that maximize a worker's utility b. all points that are equally preferred c. the wage rates that affect work decisions d. the available combinations of leisure and income 2. The slope of a wage constraint reflects the: a. rate at which a person is willing to substitute leisure for income c. income effect b. price of leisure d. substitution effect 3. When a...
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3. What happens to the reservation wage if nonlabor income increases, and why? You should include graphs with your answer 4. What happens to hours of work when the wage rate falls? Decompose the change in hours of work into income and substitution effects. 5. Cindy gains utility from consumption C and leisure L. The most leisure she can consume in any given week is 168 hours. Her utility function is UCL) = CXL. This functional form implies that the...
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3. What happens to the reservation wage if nonlabor income increases, and why? You should include graphs with your answer 4. What happens to hours of work when the wage rate falls? Decompose the change in hours of work into income and substitution effects. 5. Cindy gains utility from consumption C and leisure L. The most leisure she can consume in any given week is 168 hours. Her utility function is UCL) = CXL. This functional form implies that the...
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Labor Economics
1. In the leisure-income model, the wage constraint shows a. the points that maximize a worker's utility b. all points that are equally preferred c. the wage rates that affect work decisions d. the available combinations of leisure and income 2. The slope of a wage constraint reflects the: a. rate at which a person is willing to substitute leisure for income c. income effect b. price of leisure d. substitution effect 3. When a worker maximizes her...
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2) A decrease in the real wage
A) unambiguously increases consumption and increases labour
supply.
B) increases consumption and has an ambiguous effect on labour
supply.
C) has an ambiguous effect on consumption and increases labour
supply.
D) has an ambiguous effect on both consumption and labour
supply.
E) decreases consumption and has an ambiguous effect on labour
supply.
3) If labour supply curve is downward sloping, then
A) There is no substitution effect
B) Substitution effect is exactly equal...
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Labor Economics
9. Phil's wage increases and Phil responds by working more hours. Which of the following could explain this? a. Phil's substitution effect is larger than his income effect b. Phil views leisure as an inferior good. c. Phil's income effect is larger than his substitution effect d. Both b and c f. Phil died, but was brought back to life with an alien serum in a plot twist no one saw because they gave up after episode 5....
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when the 3) A dominating substitution effect will result in wage rate increases. A) A positively sloped labor supply (The hours of work desired increases with the wage rate) B) A positively sloped labor demand (The hours of work desired increases with the wage rate) C) A negatively sloped labor supply (The hours of work desired increases with the wage rate) D) A negatively sloped labor supply (The hours of work desired decreases with the wage rate)
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27. If consumers' income increases by one dollar and consumers consume both food and non-food, a. spending on food consumption will always increase. b. spending on food consumption will increase but by less than one dollar if both food and non- food are normal goods. c. spending on food consumption will increase only if non-food is inferior good. d. spending on food consumption will increase only if non-food is normal good. 28. A reduction in the price of good A...
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1. Janet's utility depends on consumption c and leisure l. She
earns a wage equal to w per hour, has an investment income equal to
M(greater than or equal to) 0 and needs to sleep at least 8 hours a
night. Normalize the price of consumption goods at $1.
(i) Draw her indifference curves between hours of leisure and
consumption, her budget line and her equilibrium choice of c and l.
What is the slope of the budget line and...
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Problem 3 Alan's utility function for consumption (C) and leisure time (1) is U(C,1) = 2C1/2 + 1. Each week, Alan has a time endowment of 120 hours that he can devote to work (N) or leisure time (7). The unit price of C is $1 while the unit wage rate is w. Alan also earns A dollars per week of non-labor income. a) Write the expression of Alan's budget constraint. b) Find Alan's optimal combination of consumption and leisure...
Labor Economics, multiple choice questions
1. In the leisure-income model, the wage constraint shows a. the points that maximize a worker's utility b. all points that are equally preferred c. the wage rates that affect work decisions d. the available combinations of leisure and income 2. The slope of a wage constraint reflects the: a. rate at which a person is willing to substitute leisure for income c. income effect b. price of leisure d. substitution effect 3. When a...
3. What happens to the reservation wage if nonlabor income increases, and why? You should include graphs with your answer 4. What happens to hours of work when the wage rate falls? Decompose the change in hours of work into income and substitution effects. 5. Cindy gains utility from consumption C and leisure L. The most leisure she can consume in any given week is 168 hours. Her utility function is UCL) = CXL. This functional form implies that the...
3. What happens to the reservation wage if nonlabor income increases, and why? You should include graphs with your answer 4. What happens to hours of work when the wage rate falls? Decompose the change in hours of work into income and substitution effects. 5. Cindy gains utility from consumption C and leisure L. The most leisure she can consume in any given week is 168 hours. Her utility function is UCL) = CXL. This functional form implies that the...
Labor Economics
1. In the leisure-income model, the wage constraint shows a. the points that maximize a worker's utility b. all points that are equally preferred c. the wage rates that affect work decisions d. the available combinations of leisure and income 2. The slope of a wage constraint reflects the: a. rate at which a person is willing to substitute leisure for income c. income effect b. price of leisure d. substitution effect 3. When a worker maximizes her...
Labor Economics
9. Phil's wage increases and Phil responds by working more hours. Which of the following could explain this? a. Phil's substitution effect is larger than his income effect b. Phil views leisure as an inferior good. c. Phil's income effect is larger than his substitution effect d. Both b and c f. Phil died, but was brought back to life with an alien serum in a plot twist no one saw because they gave up after episode 5....
when the 3) A dominating substitution effect will result in wage rate increases. A) A positively sloped labor supply (The hours of work desired increases with the wage rate) B) A positively sloped labor demand (The hours of work desired increases with the wage rate) C) A negatively sloped labor supply (The hours of work desired increases with the wage rate) D) A negatively sloped labor supply (The hours of work desired decreases with the wage rate)
27. If consumers' income increases by one dollar and consumers consume both food and non-food, a. spending on food consumption will always increase. b. spending on food consumption will increase but by less than one dollar if both food and non- food are normal goods. c. spending on food consumption will increase only if non-food is inferior good. d. spending on food consumption will increase only if non-food is normal good. 28. A reduction in the price of good A...
Problem 3 Alan's utility function for consumption (C) and leisure time (1) is U(C,1) = 2C1/2 + 1. Each week, Alan has a time endowment of 120 hours that he can devote to work (N) or leisure time (7). The unit price of C is $1 while the unit wage rate is w. Alan also earns A dollars per week of non-labor income. a) Write the expression of Alan's budget constraint. b) Find Alan's optimal combination of consumption and leisure...