Question

1. Tamara earns $8 an hour and works 60 hours/week. Draw her labor-leisure budget constraint. What...


1. Tamara earns $8 an hour and works 60 hours/week. Draw her labor-leisure budget constraint. What determines its slope? How does the position and slope of her budget constraint change if her wage increases to $16 per hour?
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

When $8 /hour was offered:

If the labour worked 0 hours and had 60 hours of leisure his income would be 0.This is represented by point B.

If the labour worked 60 hours a week his income would be 480(60*8)

AB is the budget constraint of the worker.

The wage rate determines the slope of the curve.

When wage rate changes to $16/hour:

When leisure hours were 60 income was 0.

When labour hours were 60 income was 960

When wage rate changes,the budget line rotates.In case of a rise in wage rate the budget line rotates to the right.

The slope falls as the budget line becomes steeper.

Please leave a comment in case of a query.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
In the labor-leisure model, the representative consumer receives satisfaction from consumption of goods (C) and from...
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...
With an initial wage rate of $15 per hour, Thomas works 35 hours per week and...
With an initial wage rate of $15 per hour, Thomas works 35 hours per week and leisures the remaining 75 hours. When his wage increases to $20 per hour he works 45 per week and when the wage increases to $25 heworks 40 hours per week. What is Thomas’ labor supply elasticity as his wage increases from $15 to $20 and then from $20 to $25? What does this value tell you about the shape of his labor supply curve...
Answer the following questions and be sure to explain your answers. 1.) Consider a labor-leisure tradeoff...
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...
Suppose that a worker’s utility (i.e., preferences) with respect to total income (Y) and hours of...
Suppose that a worker’s utility (i.e., preferences) with respect to total income (Y) and hours of leisure time per week (LT) can be represented by the following Cobb-Douglas utility function: U = Y0.4 ∙ LT0.6 (note: A=1; α=0.4; β=0.6) Assume that the market wage is $25 per hour of work (H), and his/her non-labor income is $300 per week. The worker has 70 hours per week to allocate between labor market activity and leisure time (i.e., T = 70). Given...
Lisa can gain 6 dollars per hour if she goes to work. She has 16 hours...
Lisa can gain 6 dollars per hour if she goes to work. She has 16 hours of time in a day which can be spent as leisure or labor. If she decides to go to work, she has to get on to the Ferry which will cost her 8 dollars per day. Lisa can gain 20 dollars as non-labor income daily What is the graphic of Lisa’s consumption-leisure budget constraint for a day(draw budget set). b. If Lisa is not...
Santi derives utility from the hours of leisure (l) and from the amount of goods (c)...
Santi derives utility from the hours of leisure (l) and from the amount of goods (c) he consumes. In order to maximize utility, he needs to allocate the 24 hours in the day between leisure hours (l) and work hours (h). Santi has a Cobb-Douglas utility function, u(c, l) = c 2/3 l 1/3 . Assume that all hours not spent working are leisure hours, i.e, h + l = 24. The price of a good is equal to 1...
Santi derives utility from the hours of leisure (l) and from the amount of goods (c)...
Santi derives utility from the hours of leisure (l) and from the amount of goods (c) he consumes. In order to maximize utility, he needs to allocate the 24 hours in the day between leisure hours (l) and work hours (h). Santi has a Cobb-Douglas utility function, u(c,l) = c2/3l1/3. Assume that all hours not spent working are leisure hours, i.e, h + l = 24. The price of a good is equal to 1 and the price of leisure...
.Curious George must decide how much to work. He has 60 hours per week available that...
.Curious George must decide how much to work. He has 60 hours per week available that he can spend either working or engaging in leisure (which for him is creating various kinds of mischief). He can work at a wage rate of $5 per hour. The Man with the Yellow Hat (who looks after George) also gives him an allowance of $100 per week, no matter how much George works. George's only source of income that he can use for...
John’s utility function is represented by the following: U(C,L) = (C-400)*(L-100), where C is expenditure on...
John’s utility function is represented by the following: U(C,L) = (C-400)*(L-100), where C is expenditure on consumption goods and L is hours of leisure time. Suppose that John receives $150 per week in investment income regardless of how much he works. He earns a wage of $20 per hour. Assume that John has 110 non-sleeping hours a week that could be devoted to work. a.Graph John’s budget constraint. b.Find John’s optimal amount of consumption and leisure. c.John inherits $300,000 from...
1. Show a consumer’s budget constraint and indifference curves for soda drinks and slices of pizza....
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...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT