Question

**Answer the following questions and be sure to explain
your answers.**

**1.)** Consider a labor-leisure tradeoff problem
where 24 hours must be divided between labor and leisure. You can
assume that for simplicity and assume that labor is paid a wage .
When plotting the time constraint and indifference curves, be sure
to put leisure on the *x*-axis and consumption on the
*y*-axis.

**a.)** Draw the time constraint and give its
equation in slope-intercept form.

**b.)** Suppose now that the consumer gets overtime
pay, which is time and a half, for any hours worked beyond 8 hours
per day (i.e., the worker gets 1.5 times the wage for any hours
worked beyond 8). Draw the new time constraint and give its
equation in slope-intercept form.

**c.)** Is the consumer better off or worse off
after the new overtime policy? Could the consumer be unaffected?
Does the consumer work more or less after the policy change?
Explain using graphs of the budget constraints with and without the
overtime pay policy, and the indifference curves passing through
the optimal consumption bundles.

Answer #1

In the labor-leisure model, the representative consumer receives
satisfaction from consumption of goods (C) and from the consumption
of Leisure (L). Let C be the composite good with price $1 and L
determines the number of hours of leisure this person consumes.
Therefore U = f(C,L) for this consumer. This consumer’s consumption
is constrained by time and income. Let her non-labor income, V, be
$1200 per week, let the hourly wage rate be $8 and h be the number
of...

Tom has preferences over consumption and leisure of the
following form: U = ln(c1)+ 2 ln(l)+βln(c2), where ct denotes the
stream of consumption in period t and l, hours of leisure. He can
choose to work only when he is young. If he works an hour, he can
earn 10 dollars (he can work up to 100 hours). He can also use
savings to smooth consumption over time, and if he saves, he will
earn an interest rate of 10%...

1. Consider the representative consumer’s problem as follows.
The representative consumer maximizes utility by choosing the
amount of consumption good C and the amount of leisure l . The
consumer has h units of time available for leisure l and for
working Ns , that is, h = l+Ns . Government imposes a proportional
tax on the consumer’s wage income. The consumer’s after-tax wage
income is then (1−t )w(h −l ), where 0 < t < 1 is the tax...

Research by Maria Prados and Stefania Albanesi shows that after
1995 the US economy experienced a decline in the labor force
participation of married women. The decline was particularly marked
for women with at least a college degree.
Consider Olivia a college graduate who enjoys consumption goods (C)
and leisure time (L). Upon graduating college, she is offered a job
that pays $50 an hour. Her yearly time budget is 6,000 hours. The
unit price of consumption goods is $1....

Flanders likes to run long races only. That is, he hates
running for less than two hours (each of the first 120 minutes of
running make him worse than before) but, after 120 minutes of
running, each additional minute of running makes him feel better.
Flanders has eight free hours a day.
Draw Flanders’s budget line between hours spent running
(measured on the horizontal axis) and hours spent on other leisure
activities (measured on the vertical axis). What is the...

1. Show a consumer’s budget constraint and indifference curves
for soda drinks and slices of pizza. Show the optimal consumption
choice. If the price of soda drinks is $1.50 per can and the price
of a slice of pizza is $2 per slice, what is the marginal rate of
substitution at the optimum?
2. Suppose the income elasticity of demand for food is 0.5 and
the price elasticity of demand is −0.25. Suppose also that Mia
spends $10,000 a year...

1. Show a consumer’s budget constraint and indifference curves
for soda drinks and slices of pizza. Show the optimal consumption
choice. If the price of soda drinks is $1.50 per can and the price
of a slice of pizza is $2 per slice, what is the marginal rate of
substitution at the optimum?
2. Suppose the income elasticity of demand for food is 0.5 and
the price elasticity of demand is −0.25. Suppose also that Mia
spends $10,000 a year...

Consider a one-period closed economy, i.e. agents (consumers,
ﬁrms and government) live for one period, consumers supply labor
and demand consumption good, whereas their utility function is in
the form of log(C−χN1+ν/1+ν ) (GHH preference). Firms supply
consumption good and demand labor and their production function is
y = zN^1−α. The government ﬁnances an exogenous spending via
lump-sum taxes. Suppose there is a positive shock on χ which means
the consumers favor leisure (or dislike labor) by much more than...

Answer the following questions:
41.- Kathryn Holmes cumulative earnings are $45,000 and her
gross pay for the week is $500 if the FICA rates are Social
Security 6.2% on a limit Security and FICA-Medicare taxes for the
week?
a) $31.00 $7.25
b) $310.00 $72.50
c) $3.10 $0.73
d) $25.50 $8.00
42.- The balance in the Salaries and Wages Payable account is
equal to net pay
True
False
43.- The Federal Unemployment Tax is
a) paid by the employer
b) paid...

Please answer the following Case
analysis questions
1-How is New Balance performing compared to its primary rivals?
How will the acquisition of Reebok by Adidas impact the structure
of the athletic shoe industry? Is this likely to be favorable or
unfavorable for New Balance?
2- What issues does New Balance management need to address?
3-What recommendations would you make to New Balance Management?
What does New Balance need to do to continue to be successful?
Should management continue to invest...

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