George divides his time between two jobs:• a landscape assistant which pays $20 per hour for as many hours as he chooses to work.• a customer service representative where he is tasked with finding households who want toinstall solar panels. The company pays him $5 for each household that signs a contract.The number of households George can get to sign up for solar panels depends on how manyhours he devotes to the task as noted in the table below.CustomersHours per daysigned per day1131514|1820The marginal cost of spending one hour getting customers to sign up for solar panels is equal to$4The marginal benefit of spending one hour getting customers to sign up for solar panels is equalto $To earn the most income per day, his best choice is to spend not more thanhours getting customers to sign up for solar panels.Enter whole numbers in each blank.

If George does landscape assistant job, he gets $20 per hourIf he does customer representative job…

Answered: George divides his time between two…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter16: Labor Markets

Section: Chapter Questions

Problem 16.10P

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Suppose a person can work up to 80 hours per week at a pre-tax wage of $20 per hour but faces a constant 20% payroll tax. Assume that under these conditions the person maximizes utility by choosing to work 50 hours each week. The government proposes a negative income tax so that everyone receives $300 per week regardless of how much they work. To pay for the negative income tax, the payroll tax would be increased to 50%. Using the labor-leisure model, graphically show whether a person would be better off if the negative income tax is adopted and indicate whether hours worked increases or decreases due to the policy.
Follow up question g. Explain why the utility curves cannot be drawn so as to induce the worker to work between L1 and L2 hours. h Yelowitz (1995) studies a Medicaid reform measure that reduced the Medicaid work disincentive. One of the reforms he studied raised the Medicaid eligibility threshold income level by 33%. Draw a new version of the fifigure with a new labor–income curve that reflflects this change. Explain how this change might induce someone currently working L1 hours per year to work more, and be sure to draw indifffference curves to support your answer.
Illustrate (using a labor-leisure choice diagram) how a firm may induce a typical employee to lengthen his work week voluntarily by paying him premium wage rates for overtime hours.
An individual's decision to supply her labor or to spend her time in leisure activity is known as the labor-leisure tradeoff. True or false?
Not a previously graded question. Suppose that Ciana is deciding whether or not to buy a pair of sandals that she has been researching online, and also the best place to make her purchase. Three different stores in the area sell the sandals she likes, but some stores are more convenient for Ciana to reach than others. One option is her local shoe store located only 15 minutes away from where she works, where they charge a marked-up price of $122 for the sandals: Ciana earns an hourly wage of $26 at her job. In order to purchase her sandals she will have to take time off work, so each hour away from her job costs her $26 in lost income. Assume that Ciana’s travel time is the same each way (to and from the store) and that it will take her 30 minutes once she reaches a store to complete her shopping. Assume throughout the question that Ciana incurs no additional costs other than the sandals, such as gas. Complete the following table by computing the opportunity cost of Ciana's time…
Refer to the labor–leisure budget constraint shown to answer the questions. This curve shows trade-offs between income and leisure that must be made over the course of one day. How much does this person earn per hour? $ At point A, how many hours of labor are selected? hourshours At point A, how many hours of leisure are selected? hours
What is two factors that may influence the shape of individuals’ indifference curves (flat or steep) which reflect their preferences for work or leisure? What is the difference between income effect and substitution effect under the basic work-leisure decision model?
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Carol and Brent are a two-person household. Carol's market hourly wage is $50, but Carol can also produce $30 of household production each hour. Brent's market hourly wage is $40, but Brent can also produce $20 of household production each hour. This household chooses work schedules to maximize utility. When it does this, which of the following cannot occur? a. Carol specializes in marketplace work, while Brent splits time between marketplace and household work. b. Brent specializes in marketplace work, while Carol splits time between marketplace and household work. c. Brent specializes in marketplace work while Carol specializes in household production. d. Both specialize in marketplace work and no one engages in household production. e. All of these can occur.
During the past major recession, upscale hotels in the United States recently cut their prices by 25 percent in an effort to bolster dwindling occupancy rates among business travelers. A survey performed by a major research organization indicated that businesses were becoming wary of bad economic conditions and began resorting to electronic media, such as the Internet and the telephone, to transact business. Assume a company’s budget permits it to spend $6,000 per month on either business travel or electronic media to transact business. Graphically illustrate how a 25 percent decline in the price of business travel would impact this company’s budget set if the price of business travel was initially $1,200 per trip and the price of electronic media was $600 per hour. Suppose that, after the price of business travel drops, the company issues a report indicating that its marginal rate of substitution between electronic media and business travel is −1. Is the company allocating resources…
Using Fisher's Intertemporal Choice model, consider the following scenario: Suppose Milo earns $1,750 in the first period and $2,500 in the second period. If he consumes $1,200 in the first period and $1,550 in the second period, what is the interest rate? Now if Milo’s consumption changes to $1,800 in the first period and $2,000 in the second period, what is the new interest rate?
In the United States, the working-age population does not include people: Multiple Choice in the military. who are 16 years of age. who do not have a driver’s license. who are 65 years of age. The labor supply curve: Multiple Choice shows the relationship between the total quantity of labor supplied by all firms in the economy and the wage rate. shows that, all things being equal, more workers will want to work when wages are higher and fewer will want to work when wages are lower. has a negative slope. All of these are true.

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