Homework Answers
Ans) substitution effects says, when there is a decrease in real wage there is a decrease in labor hours because leisure time increases. Income effect says decrease in real wage increases the labor hours because less leisure is enjoyed.
So substitution effect dominates because decrease in real wage decreases the supply of labor.
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Suppose a decrease in real wages results in a decrease in the supply of labour, this...
2) A decrease in the real wage A) unambiguously increases consumption and increases labour supply. B)...
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...
1. Consider how a decrease in wage will change a workers labor supply. Explain how income...
1. Consider how a decrease in wage will change a workers labor supply. Explain how income and substitution effect will change this workers choice of consumption and leisure. Make two clearly labeled diagrams showing how reducing a worker's wage affects the hours s/he is willing to work: one in which the income effect dominates, and the other in which the substitution effect dominates.
14 Question a point) 1st attempt The backward-bending labor supply curve has its shape because, at...
14 Question a point) 1st attempt The backward-bending labor supply curve has its shape because, at Choose one: O A.all wages, the income effect dominates the substitution effect O B.low wages, the substitution effect dominates the income effect, but the reverse occurs at high wages. 0 Call wages, the substitution effect dominates the income effect. O D.low wages, the income effect dominates the substitution effect, but the reverse occurs at high wages. O E. high wages, the substitution effect dominates...
7. Over the backward bending portion of the labour supply curve, a. The substitution effect of...
7. Over the backward bending portion of the labour supply curve, a. The substitution effect of a wage change dominates the income effect. b. The wage elasticity of labour supply is positive. c. Leisure becomes an inferior good. d. The wage elasticity of labour supply is negative. 8. Identify the truthfulness of the following statements: 1. The substitution effect of a wage change is ambiguous in its direction. II. Direction of the income effect depends on whether the good is...
1. Suppose that, for the production process for quarks, labour and capital are gross complements. Using...
1. Suppose that, for the production process for quarks, labour and capital are gross complements. Using isoquant / isocost analysis, illustrate how the long-run quantity-demanded for labour would be affected by a decrease in the cost of capital. Illustrate both the “substitution effect” and the “scale effect.” 2. Suppose capital and labour are perfect substitutes for producing widgets and that it takes 1 unit of capital or 3 units of labour to produce one widget. If the price of labour...
The position of the Long Run Aggregate Supply (LRAS) is determined by: (a) the level of money wages. (b) the curren...
The position of the Long Run Aggregate Supply (LRAS) is determined by: (a) the level of money wages. (b) the current price level. (c) the level of aggregate demand in the goods market. (d) equilibrium in the labour market. (e) the stance of fiscal policy. The correct answer is (d) please explain the reason.
8) Consider our model of labour supply and labour demand. Suppose the government decreases the lump-sum...
8) Consider our model of labour supply and labour demand. Suppose the government decreases the lump-sum tax, T. How will this shock affect the labour market equilibrium? A) Equilibrium quantitiy of labour will go up, and equilibrium wage will go up B) Equilibrium quantitiy of labour will go up, and equilibrium wage will go down C) Equilibrium quantitiy of labour will go down, and equilibrium wage will go up D) Equilibrium quantitiy of labour will go down, and equilibrium wage...
Individual X and Y work 10 and 6 hours a day, respectively. Their hourly wage is...
Individual X and Y work 10 and 6 hours a day, respectively. Their hourly wage is $8 per hour. If their wage goes up to $10 per hour, individual X and Y adjust their hours of work as 12 and 5 hours a day, respectively. (Assume that both individuals faces the same 16 hours constraint in a day) (a) (5 points) What can you tell about their indifference curves? (e.g flat or steep) Explain briefly what your answer implies about...
Suppose real output is initially at its full employment level. Using Aggregate Demand (AD)—Aggregate Supply (AS) framework, discuss the short-run and long-run effects of a decrease in government expe...
Suppose real output is initially at its full employment level. Using Aggregate Demand (AD)—Aggregate Supply (AS) framework, discuss the short-run and long-run effects of a decrease in government expenditure on the price level, real output, nominal wage rate and real wage rate under the following three alternative assumptions: nominal wages are fully flexible nominal wages are relatively slow to adjust nominal wages are completely rigid.
can someone please explain the bonus question to me please. 10:31 AM Thu Oct 31 +...
can someone please explain the bonus question to me
please.
10:31 AM Thu Oct 31 + 83% B 0 a) necessarily increases consumption in the first period. b) does not change consumption in either period. c) necessarily increases consumption in the second period. d) necessarily increases consumption in the first and second period. e) necessarily decreases consumption in the first and second period. BONUS 7) Suppose that two consumers have different endowments but the same present value of disposable income....
14 Question a point) 1st attempt The backward-bending labor supply curve has its shape because, at Choose one: O A.all wages, the income effect dominates the substitution effect O B.low wages, the substitution effect dominates the income effect, but the reverse occurs at high wages. 0 Call wages, the substitution effect dominates the income effect. O D.low wages, the income effect dominates the substitution effect, but the reverse occurs at high wages. O E. high wages, the substitution effect dominates...
7. Over the backward bending portion of the labour supply curve, a. The substitution effect of a wage change dominates the income effect. b. The wage elasticity of labour supply is positive. c. Leisure becomes an inferior good. d. The wage elasticity of labour supply is negative. 8. Identify the truthfulness of the following statements: 1. The substitution effect of a wage change is ambiguous in its direction. II. Direction of the income effect depends on whether the good is...
The position of the Long Run Aggregate Supply (LRAS) is determined by: (a) the level of money wages. (b) the current price level. (c) the level of aggregate demand in the goods market. (d) equilibrium in the labour market. (e) the stance of fiscal policy. The correct answer is (d) please explain the reason.
can someone please explain the bonus question to me
please.
10:31 AM Thu Oct 31 + 83% B 0 a) necessarily increases consumption in the first period. b) does not change consumption in either period. c) necessarily increases consumption in the second period. d) necessarily increases consumption in the first and second period. e) necessarily decreases consumption in the first and second period. BONUS 7) Suppose that two consumers have different endowments but the same present value of disposable income....
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