Having hours of leisure in the x-axis (24 is the maximum) and Income in the y-axis,...
Having hours of leisure in the x-axis (24 is the maximum) and Income in the y-axis, use indifference curve and constraint analysis to analyze the behavior of employees who are paid:
a. An hourly wage rate of $4 per hour (assume workers choose to work 8 hours here).
b. A fixed hourly wage of $4 per hour, plus an overtime bonus of $4 for every hour worked in excess of eight hours.
c. A fixed salary of $40 per day, plus $4 for each hour worked.
d. Which of the above schemes would yield the largest number of hours worked? Explain.
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Having hours of leisure in the x-axis (24 is the maximum) and
Income in the y-axis,...
Use indifference curve and the daily income-leisure choice model to explain graphically the behavior of employees...
Use indifference curve and the daily income-leisure choice model to explain graphically the behavior of employees who are paid: a. An hourly wage rate of $14 per hour and the worker chooses to work 10 hours per day. b. A fixed hourly wage of $14 per hour, plus an overtime bonus of $14 for every hour worked in excess of eight hours and the worker chooses to work 10 hours per day. c. A fixed salary of $40 per day,...
Suppose you have 24 hours per day that you can allocate between leisure and working (i)...
Suppose you have 24 hours per day that you can allocate between leisure and working (i) Draw the budget constraint between “leisure hours” on the horizontal axis and “wage income” on the vertical when the wage rate is $40 per hour. Mark an optimum point A that is meaningful. Draw a new budget constraint when the wage rate falls to $30 per hour. Show a new optimum point B. (ii) On your indifference curve diagram, decompose the effect of the...
Draw a graph with leisure on the horizontal axis and income on the vertical axis. Assume 320...
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...
3. Consider a consumer who has well-behaved preferences over leisure (L) and consumption (x) They have...
3. Consider a consumer who has well-behaved preferences over leisure (L) and consumption (x) They have nonlabor income m and have 24 hours in the day that must be divided between leisure and working. They are initially paid a wage w for each hour of work. The price of x is 1 (a) Suppose they optimally choose to work 8 hours. Draw the consumer's budget set and an indifference curve showing this situation. (b) Now suppose that they are paid...
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...
A person chooses between leisure and consumption. All of their consumption comes from current income. The...
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...
Clark gains utility from consumption c and leisure l and his preferences for consumption and leisure...
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...
A company pays its employees as managers (who receive a fixed weekly salary), hourly workers (who...
A company pays its employees as managers (who receive a fixed weekly salary), hourly workers (who receive a fixed hourly wage for up to the first 40 hours they work and “time-and-a-half,” i.e. 1.5 times their hourly wage, for overtime hours worked), commission workers (who receive $250 plus 5.7% of their gross weekly sales), or pieceworkers (who receive a fixed amount of money per item for each of the items they produce-each pieceworker in this company works on only one...
Continuing Payroll Problem, 2B: Chapter 2 Olney Company, Inc. is a small manufacturing firm located in...
Continuing Payroll Problem, 2B: Chapter 2 Olney Company, Inc. is a small manufacturing firm located in Newtown, Pennsylvania. The company has a workforce of both hourly and salaried employees. Each employee is paid for hours actually worked during each week, with the time worked being recorded in quarter-hour increments. The standard workweek consists of 40 hours, with all employees being paid time and one-half for any hours worked beyond the 40 regular hours. Wages are paid every Friday, with one...
Continuing Payroll Problem, 2A: Chapter 2 Kipley Company is a small manufacturing firm located in Pittsburgh,...
Continuing Payroll Problem, 2A: Chapter 2
Kipley Company is a small manufacturing firm located in
Pittsburgh, Pennsylvania. The company has a workforce of both
hourly and salaried employees. Each employee is paid for hours
actually worked during each week, with the time worked being
recorded in quarter-hour increments. The standard workweek consists
of 40 hours, with all employees being paid time and one-half for
any hours worked beyond the 40 regular hours.
Wages are paid every Friday, with one week's...
3. Consider a consumer who has well-behaved preferences over leisure (L) and consumption (x) They have nonlabor income m and have 24 hours in the day that must be divided between leisure and working. They are initially paid a wage w for each hour of work. The price of x is 1 (a) Suppose they optimally choose to work 8 hours. Draw the consumer's budget set and an indifference curve showing this situation. (b) Now suppose that they are paid...
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...
Continuing Payroll Problem, 2A: Chapter 2
Kipley Company is a small manufacturing firm located in
Pittsburgh, Pennsylvania. The company has a workforce of both
hourly and salaried employees. Each employee is paid for hours
actually worked during each week, with the time worked being
recorded in quarter-hour increments. The standard workweek consists
of 40 hours, with all employees being paid time and one-half for
any hours worked beyond the 40 regular hours.
Wages are paid every Friday, with one week's...
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