1.At equillibirium Chillhong is working for 100,000/10,000=10 hours per day, so leisure= 24-10=14
2.Chillong's labour supply= 10 hours per day.
3. In the new scenario, slope of Chillong's new budget line is flatter till 10 hours of work i.e -7000 instead of -10000.
4.Chillong's labour supply might vary in the sense that, now he/she might prefer to work less than 10 hours per day as increment for every hour till 10 hours is only 7000 per hour compared to 10000 per hour in the above scenario.How much will they work depends on the particular utility function.
Part II Suppose that Chilhong's total time endowment is 24 hours and the given wage rate is W 10,000 per hour....
Leisure-labour choice 1. Mr. Cog works in a machine factory. He can work as many hours per day as he wishes at a wage rate of w. Let C be the number of dollars he spends on consumer goods and let R be the number of hours of leisure that he chooses. (a) Mr. Cog earns $8 an hour and has 18 hours per day to devote to labor or leisure, and he has $16 of nonlabor income per day....
A worker receives a wage rate w and has L hours of leisure every day (the total endowment of hours is 24 hours per day). The government taxes his income at the constant rate T. The worker spends all his income. 1. Write a budget constraint of this individual and plot it. 2. Display graphically what is the optimal consumption-leisure choice for this worker. 3. Imagine that the government increases the tax rate to T 0 . What is the...
3. Suppose earnings are given by E $70 $8(24 L), where E is earnings and L is the hours of leisure a. Draw the budget constraint b. How much would this person earn if she does not work at all? c. How many hours is this person working if her daily earnings are $142? d. How many hours of leisure is this person taking if her daily earnings are $142? e. Draw the indifference curve showing that earning $142 maximizes...
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...
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...
Pat's wage rate is $6 per hour and she has a maximum of 100 hours per week to allocate between leisure and work. Without any welfare assistance program, Pat chooses to work 37.5 hours per week. a. Suppose Pat is eligible for welfare benefits of $225 per week, but benefits are reduced $1 for every $1 she earns. Draw the budget line (label all relevant values) and indifference curve that represents Pat's maximum utility under these circumstances. b. The structure...
Question 1: People decide how to “budget” their time in much the same way that they decide how to budget for different goods. Each person decides how much they “value” their leisure time versus their work time. The more people work, the more they tend to value their remaining leisure time. This is the justification for paying overtime to people working over 40 hours per week. a. How might we model this trade-off economically using the basic labor supply model...
Question 1: People decide how to “budget” their time in much the same way that they decide how to budget for different goods. Each person decides how much they “value” their leisure time versus their work time. The more people work, the more they tend to value their remaining leisure time. This is the justification for paying overtime to people working over 40 hours per week. a. How might we model this trade-off economically using the basic labor supply model...
Question 4: People decide how to “budget” their time in much the same way that they decide how to budget for different goods. Each person decides how much they “value” their leisure time versus their work time. The more people work, the more they tend to value their remaining leisure time. This is the justification for paying overtime to people working over 40 hours per week. How might we model this trade-off economically using the basic labor supply model by...
Emma’s wage rate is $10 per hour and she has a maximum of 100 hours per week to allocate between leisure and work. In the absence of any tax on wage earnings, Emma optimally chooses to work 40 hours per week. The following tax is imposed. Emma is not taxed on the first $240 earnings per week, but each dollar earned beyond that is taxed at 10%. Does the tax cause Emma to work more, work less, or have no...