5. Suppose the wage is 80 per hour and that the consumer has 100 hoursH to work with. Suppose that the MRS is given by o: What will the consumer's choices of c and l be. Repeat with an upper boundof 10 hours. Repeat both parts with a 10% tax rate for all incomelevels. Suppose that the tax rate has two brackets so that income fromhours above H is taxed at 20 percent. How does the solution change?Suppose that consumers must instead pay a lump sum tax that raisesthe same tax revenues as the one listed above. How will outcomeschange?

The budget constraint of the individual can be written as follows:

Answered: 5. Suppose the wage is 80 per hour and…

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: The Markets For The Factor Of Production

Section: Chapter Questions

Problem 4QR

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Why does substitution bias arise if we calculate the inflation rate based on a fixed basket of goods?
What is die price commonly called in the labor market?
If you an? out of school but working part time, are you considered employed or unemployed in U.S. labor statistics? If you are a full time student and working 12 hours a week at the college cafeteria are you considered employed or not in the labor force? If you are a senior citizen who is collecting social security and a pension and working as a greater at Wal-Mart are you considered employed or not in the labor force?
Define economic rent. In the graph below, assume that the market demand curve for labor isinitially D1. a. What are the equilibrium wage rate and employment level?What is the economic rent? What is the opportunity cost?b. Next, assume that the price of a substitute resource increases,other things constant. What happens to demand for labor? Whatare the new equilibrium wage rate and employment level? Whathappens to economic rent? What is the opportunity cost?c. Suppose instead that demand for the final product drops, otherthings constant. Using labor demand curve D1 as your startingpoint, what happens to the demand for labor? What are the newequilibrium wage rate and employment level? Does the amountof economic rent change? Does opportunity cost change?
Suppose Jenny has 16 hours per day to allocate between work and leisure and she earns a wage rate of $25 per hour. If at the utility-maximizing level of employment (i.e., MRSy; = w), Jenny's MUy is 20 utils, what is her MUl? O A. 1.25 utils O B. 0.8 utils O C. 500 utils O D. Cannot be determined with the information provided.
2. Consider a labour market with 3 types of workers: great workers, normal workers, and perpetually lazy workers. The population is composed of a great workers, a proportion of ẞ of normal workers, and the remaining 1-a - B lazy workers. A firm is looking to employ workers. The productivity of each type of workers are $50, $20 and $10 respectively but the firm does not know productivity, only workers do. Workers are willing to work as long as they get paid no less than $5 lower than their productivity (example: lazy workers are willing to work for $5 and up). For which values of (a, B) are all workers employed in equilibrium? For which values (a, ẞ) only the normal workers and lazy workers employed, and for which values of (a, B) are only the lazy workers employed? Explain your findings!
Part (a):Suppose that the demand for the Dates and supply of the Dates in Ramadan both are declined byequal amount over some period of time. What you can conclude with this information? Explainand graphically show the effect on equilibrium price and equilibrium quantity.Part (b):Why is money not considered to be a capital resource in economics and why is entrepreneurialability considered to be a part of economic resource, distinct from labor? Please suggest two mostimportant function of entrepreneurs, you think is must?
Suppose the working-age population is 50 million, the labour force is 20... Suppose the working-age population is 50 million, the labour force is 20 million, and the unemployment rate is 15 per cent. The number of unemployed people is a. 4.5 million. O b. 7.5 million. O C. 10.5 million. O d. 1.5 million. O e. 3 million.
a)Suppose you earn a 3% wage increase from your employer. Then, the government releases economic data indicating the inflation rate is running at 5%. Are you better off? Based upon changes in your real wages, did your standards of living improve ? b) suppose you took out 20,000 in student loans at a fixed interest rate of 5%. Assume that after you graduate, inflation rises significantly as you are paying back your loans. Does this rise in inflation benefits you in paying back your student loans? Who hurt more from unexpected higher inflation, a borrower or a lender? c) in January 1980 the CPI stood at 77.8. By January 2006 the CPI was 198.3. By what percent have consumer prices increased over this period? Assume college graduates entering the job market in 1980 were being paid on average $1200 per month. Assume college graduates entering the job market in 2006 were being paid on average $3000 per month. Are the newer graduates paid more or less in real terms?
1. Supose that·Total Factor Productivity increases·Capital depreciates by 10%Everything else equal, what happens to labor demand in the economy?A. It decreases (i.e. shifts to the left of the demand curve)B. It increases (i.e. shifts to the right of the demand curve)C. Not enough information to answer 2. Does an increase in the wage causes leisure always to increase, because leisure is a normal good?A. YesB. NoC. Only if the substitution effect dominates the income effectD. Only if the income effect dominates the substitution effect
A6 Show that the real wage implied by price-setting behaviour is a constant fraction of the marginal product of labour. How does this share vary with the intensity of product market competition? Explain intuitively.
Workers are compensated by firms with benefits in addition to wages and salaries. The most prominent offered by many firms is health insurance. Suppose that in 2000, workers at one steel plant were paid $30 per hour and in addition received health benefits at the rate of $6 per hour. Also suppose that by 2010 workers at that plant were paid $31.50 per hour but received $13.5 in heakth insurance benefits. a. By what precentage did total compensation (wages plus benefits ) change at this plant from 2000 to 2010? Total compensation increased or decreased by________ percent? What was the approximate average annual percentage change in total compensation? b. By what percetage did wages change at this plant from 2000 to 2010? Wages increased or decreased by ______percent? What was the approximate average annual percentage in wages? c. If workers value a dollar of heath benefits as much as they value a dollar of wages, by what total percentage will they feel their incomes have risen over…

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