If a negative income tax is adopted, work effort will decrease if 1. 2. 3. (a) (b) (c) (d) Leisure is inferior Leisure is normal The income effect offsets the substitution effect 1 only 2 only 3 only 1 and 3 only 2 and 3 only Use a labor-leisure choice diagram to explain your answer.
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- ASAP pls Discuss the possible substitution effect and the income effect of an increase in income on leisure time..1. A consumer has ·100 hours of time to allocate to either labor or leisure·A real wage w=50·Dividends income of 500·Taxes for 1500 It is feasible for the consumer to purchase 3000 unit of consumption.A. TrueB. False 2. A consumer has ·100 hours of time to allocate to either labor or leisure·A real wage w=30·Dividends income of 500·Taxes for 1500 It is feasible for the consumer to purchase 3000 unit of consumption.A. TrueB. False 3. 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 4. Supose that·Total Factor Productivity decreases by 10%·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…Marley has 100 hours per week available she can spend either working or doing leisure activities. He can work at a wage rate of $50 per hour. Bob receives $1000 of rental income per week, no matter how much he works. Use leisure-income model to solve this:- i) draw Marley budget line and optimal choice of working 80 hours in a week then calculate the maximum and optimal amount of income ii.) And suppose Marley is suppose to share the household expenses and then be taxed 50% of her wage income. then draw another diagram to compare Marley choice in Part i) and the new labour supply decision of working 90 hours per week due to the tax. Clearly label out the income effect, substitution effect and total effect in the diagram.
- True or False. Explain why. Deniz’s preferences for consumption and leisure is as follows:U(C,L)=C2LDeniz has 100 hours in the week available to split between work and leisure. She earns $10 per hour after taxes. She also receives $260 worth of welfare benefits each week. Deniz’s optimal amount of leisure time will be 45 whereas labour supply will be 55.In a consumption-leisure model, where P is the price of consumption and w is the wageand h is the hours, how do I mathematically calculate the effect of wage jncrease (wage/price of good) on the ff: >consumption>leisure>hours worked How do I know which is stronger between income effect and substitution effect due to increase in w/p? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.One proposal for reforming the welfare system is to create a negative income tax. Under the negative income tax, each person is entitled to a grant of G dollars permonth. For every dollar the person earns, the grant is reduced by t dollars. a. Suppose G = 200 and t = 0.40. Consider an individual whose hourly wage = $10. There are 30 days in a month, so the total allotment of T = 720. Sketch the budgetconstraint before and after the introduction of the negative income tax. b. Would people work more or less with the implementation of this system? c. What if t = 100%? Explain!
- Consider a person who can work up to 80 hours each week at a pretax wage of $20 per hour but faces a constant 20 percent payroll tax. Under these conditions, the worker maximizes her utility by choosing to work 50 hours each week. The government proposes a negative income tax whereby everyone is given $300 each week and anyone can supplement her income further by working. To pay for the negative income tax, the payroll tax rate will be increased to 50 percent.a. On a single graph, draw the worker’s original budget line and her budget line under the negative income tax.b. Show that the worker will choose to work fewer hours if the negative income tax is a dopted.c. Will the worker’s utility be greater under the negative income tax?The Environmental Protection Agency (EPA) wants to investigate the value workers place on being able to work in “clean” mines over “dirty” mines. The EPA conductsa study and finds the average annual wage in clean mines to be $42,250 and the average annual wage in dirty mines to be $47,250.a. According to the EPA, how much does the average worker value working in a clean mine?b. Suppose the EPA could mandate that all dirty mines become clean mines and that all workers who were in a dirty mine must therefore accept a $5,000 pay decrease. Are these workers helped by the intervention, hurt by the intervention, or i ndifferent to the intervention?Humanity is faced with a tough choice, work or leisure. Within the theory of consumer behaviour, apply the labour-leisure choice model to explain what happens when there are two (2) consecutive increases in the wage rate of a an individual and use that to derive the individual's 1.labour supply curve 2.demand for leisure curve
- 4. The different programs discussed in this chapter often have ambiguous effects on work effort. It is, nonetheless, possible to compare the work incentives of two programs by looking at what happens when the individual is indifferent between two programs. Use this approach to compare the work incentives of the following two pairs of programs: a. Earned income tax credit compared to welfare (discuss this only during the phase-in part of the EITC which would be the more likely scenario for an agent to be at risk of non-participating in the labor market). b. Wages subsidy compared to a negative income tax. In both cases, use graphs to show the hours of work chosen under the two programs by an individual who is indifferent between the two programs.Deborah has 80 hours per week available for work and leisure. Her current wage rate is $25 per hour. Deborah has $400 of rental income every week. a) Construct a proper diagram to describe Deborah’s choice of working 40 hours per week. Calculate Deborah’s maximum possible income and optimal income, and show them in the diagram. b) Suppose Deborah recently moved into her boyfriend’s place. She shares the household expenses and is “taxed” 50% of her wage income. Draw another diagram to compare Deborah’s choice in Part a) and a new labor supply decision of working 50 hours per week due to the “tax”. Clearly label out the income effect, substitution effect and total effect in the diagram. Question Two Samantha has an annual non-labour income of $5000. Suppose she has the total available time of 4160 hours per year. Samantha's wage rate is $15 per hour, and she chooses to work 2000 hours in a year. Suppose when Samantha's wage rate increases from $15 to $18 per hour, she will work 2040…The town of Villageton has 500 residents, of which 300 are employed, 30 are not working but activelyseeking work, 70 are children in school, 40 are retirees, 30 are full-time college students, 20 areinstitutionalized, and 10 are discouraged workers.e. Calculate the labor force participation rate (LFPR) using the numbers above.3. Suppose that a hypothetical “consumer market basket” consists only of Goods B and C, in thequantity: B = 10 and C = 6. As in question #1, use 2021 as a base year (i.e., 2021 = 100).
