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Jane is lazy person while John is hard-working person. Use graphs to show that John has lower reservation wage than Jane?
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- Jane is lazy person while John is hard-working person. Use relevant graphs to show that Jane has higher reservation wage than John?draw a budget line for a person who works 2000 hours a year today at 16$ per hour and expects to work 2000 hours in the future at the same wage. then show the effect on the graph if he increases his hourly wage to 50$an hourSarah is awake for 100 hours per week. Using one diagram, show Sarah’s budget constraints if she earns $6 per hour, $8 per hour, and $10 per hour. Now draw indifference curves such that Sarah’s labor supply curve is upward sloping when the wage is between $6 and $8 per hour, and backward sloping when the wage is between $8 and $10 per hour.
- There are two consumers, Cindy and Shelly. Cindy’s marginal rate of substitution equals C/L.Shelly’s marginal rate of substitution equals (C – 200)/(L – 80). Assume that each personchooses not to work and that there are 168 hours in a given week. Since Cindy and Shelly arenot working, they qualify for welfare. Assume each individual earns $630 in welfare paymentseach week whether they work or not.(a) Given these numbers, calculate each person’s MRS. Show your work.(b) Using your answer from part (a), graph Cindy’s and Shelly’s indifference curves onthe same set of axes. Label everything.(c) Assume Cindy and Shelly are each offered a job, and they each could earn the samereal wage. Given your answer from part (a), who is more likely to take the job andwhy?Assume that a person earns $10 per hour and her non-labor income increases from $100 to$200. She also has 110 hours a week to decide either to work or leisure. a. Draw a budget constraint of this person.b. Draw an indifference curve to show the income and substitution effect of change innon-labor income. HINT: you can draw two separate graphs to show the effect ofsubstitution and income effects.Bassie, who can currently work as many hours as she wants at a wage of w, chooses to work ten hours a day. Her boss decide to limit the number of hours that she can work to eight hours per day. Show how her budget constraint and choice of hours changes. Is she unambiguously worse off as a result of this change? why?
- You have sum of Rs. (X), how will you spend it on commodities A, B, C, and to get maximum satisfaction? Consider all the commodities have the same price.Labor-Leisure choice. Uses 80 hour maximum work week. Utility = R3C2 R = leisure C = dollar amount of income for consumption Budget Line 1: Wage = $16 per hour. No other income. Draw the Labor-Leisure diagram, including the budget line. Solve the point of optimization, and label it point A. Draw the indifference curve. Label it U1 Budget Line 2: Wage = $22 per hour. No other income. Draw the budget line for this new $22 wage. Solve the point of optimization, and label it point B. Draw the indifference curve. Label it U3 Use an auxiliary budget line to separate the income effect from the substitution effect. Identify the substitution effect as point S. Draw the indifference curve. Label it U2 The point of optimization for part C can be labeled, rather than numerically solved, as long as the drawn answers show expected results for two normal goods.Joe won $365,000 a year for life in the state lottery ($1000 per day for life). Use a labor-leisurechoice analysis to answer the following questions:a. Show how Joe’s lottery winnings affect the position of his budget line.[Hint: think about the two things Joe “purchases”, goods (G) and relaxation (R).Assume the price of goods is PG (you can assume this is equal to one if that makes themath easier for you) and the “price” of leisure is Joe’s foregone wage (w). It’s alsoeasiest if you think of this in the context of his daily budget constraint.]b. Joe’s utility function for goods per day (G) and hours of leisure (relaxation) per day (R) isU = G + 240R1/2. After winning the lottery, does Joe continue to work the same numberof hours each day? What is the income effect of Joe’s lottery gains on the amount ofgoods he buys per day?
- List and explain the four (4) properties of the indifference curves Describe the Giffen good and give an example. How do indifference curves represent the consumer's preferences? How do wages affect labor supply?Angela has been working at a real wage rate of $25 per hour. Illustrate in a diagram how Bruno’s decision to use more robots could affect Angela’s future levels of• real wage,• utility,• free time, and• consumption.Your diagram should have Angela’s daily free time on the horizontal axis and her daily consumption on the vertical axis. Briefly explain your diagram within 70 wordsHannah’s wage rate is initially $10 per hour and she maximises her utility by supplying 8hours of work. Subsequently, her wage rate increases to $15 per hour and her newequilibrium position corresponds to 9 hours of work. It is noted that the income effect (IE)causes the labour supply to change by 1 hour and the substitution effect (SE) causes thelabour supply to change by 2 hours. How to draw in diagram, to show the IE and SE?
