On a separate sheet of paper, draw a labor-leisure diagram with consumption ($) on the vertical axis, and hours of leisure on the horizontal axis. Assume there are 16 discretionary hours in a day, and that wage is $20 per hour, and unearned income, V, is $100. Draw the budget constraint for a day, labeling the endpoints, and draw a utility maximizing indifference curve. Label approximate hours of leisure, labor, and earnings at the optimal point (choose numbers that appear to fit your curve). Bring this paper with you to turn in before class, or submit a high quality picture or scan of your hand written graph.
On a separate sheet of paper, draw a labor-leisure diagram with consumption ($) on the vertical...
This problem focuses on the labor supply effects of subsidies. Assume Ann gets utility from consumption c and leisure l. Ann chooses how many hours to supply to the labor market each day (h) but only has 16 hours per day for work and leisure (assuming 8 hours of sleep). For each hour she works, she earns an hourly wage w = 15. Assume Ann has no unearned income v = 0. 1. Write down Ann’s daily budget constraint in...
A person chooses between leisure and consumption. All of their consumption comes from current income. The utility derived from any combination of leisure and consumption is given by U- YL-88Y where U is utility, L is the hours of leisure per week and Yis the number of dollars of income all of which will be spent on consumption. The person can work as many hours as they wish during the week at a constant wage of $4 per hour. There...
Draw a graph with leisure on the horizontal axis and income on the vertical axis. Assume 320 discretionary hours in a month, that can be used for labor or leisure, and that the wage is $10 an hour. Draw the budget constraint, and an indifference curve corresponding to choosing a full time 160 hour a month job. Label earnings. Assume the family would qualify for $600 in TANF benefits each month if hours of labor are zero. The program offers a $225 earned...
Problem #1: Optimal labor supply Clark gains utility from consumption c and leisure l and his preferences for consumption and leisure can be expressed as U(c, l) = 2(√ c)(l). This utility function implies that Clark’s marginal utility of leisure is 2√ c and his marginal utility of consumption is l √ c . He has 16 hours per day to allocate between leisure (l) and work (h). His hourly wage is $12 after taxes. Clark also receives a daily...
Clark gains utility from consumption c and leisure l and his preferences for consumption and leisure can be expressed as U(c, l) = 2(√ c)(l). This utility function implies that Clark’s marginal utility of leisure is 2√ c and his marginal utility of consumption is l √ c . He has 16 hours per day to allocate between leisure (l) and work (h). His hourly wage is $12 after taxes. Clark also receives a daily check of $30 from the...
4. Consider the consumption-leisure choice model we discussed in class. Suppose individual utility is represented by the function U(c, L) = min {c, 10L}, where c is consumption and L is leisure. Individuals have a total h = 16 hours that could be divided into work and leisure. Market wage rate is w = 10. (a) Sketch the individual’s indifference curve. (b) Find the optimal consumption and leisure choice. (c) Now suppose wage increases to w = 12. Find the...
Problem #2: A subsidy on earnings This problem focuses on the labor supply eects of subsidies. Assume Ann gets utility from consumption c and leisure l. Ann chooses how many hours to supply to the labor market each day (h) but only has 16 hours per day for work and leisure (assuming 8 hours of sleep). For each hour she works, she earns an hourly wage w = 15. Assume Ann has no unearned income v = 0. Write down...
Question 1: Households A household's utility over consumption C and leisure l is U - U(C,0) Cl 1. Plot the household's indifference curve for U-80 for values of C andlless than 20 (i.e. find the curve containing all combinations of C and ( such that U(C, 0) 80) The household has a time endowment of h=16 hours per day. The wage rate per hour is w 1.25. The household's labour income is therefore wNs, where N-h-l-16- l is the time...
On a separate sheet of paper, draw a labor supply and demand diagram for a single firm in a competitive labor market. Remember, a competitive firm can hire as many workers as it likes at the market wage w* so supply of labor to the firm is horizontal. Label your axes, your supply and demand curves, and labor market equilibrium, w*, E*. On a second graph, draw a labor supply and demand diagram for a non-discriminating monopsonist, where the monopsonist...
Takashi has non-labor income from his investments of I= $80 per day, and can earn an hourly wage at his job of $30 per hour. Assume Takashi can work (or not work) as much as 24 hours in a day. a. Write a formula for Takashi’s budget constraint as a function of L (leisure hours) and C (consumption spending per day).Draw a diagram showing this budget constraint. b. Suppose Takashi’s utility function is given by U = 2lnL+ lnC, where...