EBK PRINCIPLES OF MACROECONOMICS
12th Edition
ISBN: 9780134079592
Author: Oster
Publisher: YUZU
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Question
Chapter 15, Problem 1.6P
To determine
Interdependence of household consumption and labor supply decision.
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Students have asked these similar questions
What does "factor mobility" refer to in economics? A) The movement of goods and services through an economy B) The
ability to transfer investment from one sector to another C) The movement of labor and capital between different sectors
or regions D) The fluidity of price adjustments in response to market changes
True or False
1. If leisure and consumption are normal goods, the
labor supply curve is more likely to be backward
bending when the consumer views leisure and
consumption to be more substitutable for one
another.
The lines on the graph are budget constraints, showing the tradeoff between labor and leisure. Suppose that when the wage changes, an individual chooses to move from point A to another point on the graph.
For each of the other points, where would it belong on the backward bending labor supply curve?
Backward‑bendingportionVerticalportionUpward‑slopingportion
Answer Bank
B
D
F
C
E
Chapter 15 Solutions
EBK PRINCIPLES OF MACROECONOMICS
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- 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.arrow_forwardSuppose that John could work 365 days per year and could earn $200 per day for each day he worked. Draw his budget lines with respect to his labor-leisure choice.arrow_forwardBased on this model, firms earn revenue when Suppose Teresa earns $750 per week working as a pilot for Wingies. She uses $10 to take a yoga class at Big Bend. Big Bend pays Sam $475 per week to instruct yoga. Sam uses $350 to purchase international flights from Wingles. Event purchase Identify whether each of the following events in this scenario occurs in the factor market or the product market. Sam earns $475 per week working for Big Bend. Teresa spends $10 to take a yoga class. Teresa earns $750 per week working for Wingies. Factor Market Product Market in product markets. The $475 per week Sam earns working for Big Bend O Teresa's labor Which of the elements of this scenario represent a flow from a household to a firm? This could be a flow of dollars, inputs, or outputs. Check all that apply. The yoga class Teresa receives The $350 Sam spends to purchase international flights from Wingiesarrow_forward
- Based on this model, households earn income whenfirms purchase in factor markets. Suppose Amy earns $525 per week working as an analyst for A-Plus Accountants. She uses $10 to buy a box of aspirin at Pillmart Pharmacy. Pillmart Pharmacy pays Van $225 per week to work the cash register. Van uses $150 to purchase tax services from A-Plus Accountants. Identify whether each of the following events in this scenario occurs in the factor market or the product market. Event Factor Market Product Market Amy spends $10 to buy a box of aspirin. Van earns $225 per week working for Pillmart Pharmacy. Van spends $150 to purchase tax services from A-Plus Accountants. Which of the elements of this scenario represent a flow from a firm to a household? This could be a flow of dollars, inputs, or outputs. Check all that apply. The $225 per week Van earns working for Pillmart Pharmacy The $150 Van spends to purchase tax services from A-Plus Accountants The aspirin Amy receives Amy's laborarrow_forwardBased on this model, households earn income when firms purchase factors in factor markets. Suppose Hilary earns $725 per week working as an analyst for A-Plus Accountants. She uses $10 to buy a box of aspirin at Pillmart Pharmacy. Pillmart Pharmacy pays Edison $250 per week to work the cash register. Edison uses $350 to purchase tax services from A-Plus Accountants. Identify whether each of the following events in this scenario occurs in the factor market or the product market. Event Factor Market Product Market Edison spends $350 to purchase tax services from A-Plus Accountants. Hilary earns $725 per week working for A-Plus Accountants.arrow_forwardMarkets for Goods and Services Households Firms Markets for Factors of Production in markets for factors of production. purchase Based on this model, households earn income when Suppose Alyssa earns $625 per week working as a flight attendant for Flyaway Airlines. She uses $10 to buy a box of aspirin at Pillmart Pharmacy. Pillmart Pharmacy pays Tim $375 per week to work the cash register. Tim uses $225 to purchase air travel to Hawaii from Flyaway Airlines. Identify whether each of the following events in this scenario occurs in the market for factors of production or the market for goods and services. Market for Factors of Market for Goods and Production Services Event Alyssa spends $10 to buy a box of aspirin. Tim spends $225 to purchase air travel to Hawaii from Flyaway Airlines. Tim earns $375 per week working for Pillmart Pharmacy.arrow_forward
- 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?arrow_forwardThis table provides some information about hourly output and revenue for a firm in a competitive market. Each factor of production (L) in the table represents one worker. For example, a total of 3 workers produce a total of 18 units per hour. Using the data provided: a. Complete the table. b.Using the data from the table construct the MRP and the MRC curves at an MRC (wage) of $20.00 per hour with MRP and MRC on the vertical and FPs on the horizontal axis.How many laborers (FPs) would be employed at $20.00 per hour? Why? c.If the employer had to increase the hourly rate by $5.00, how many laborers (FPs) would be employed Why?arrow_forwardThis table provides some information about hourly output and revenue for a firm in a competitive market. Each factor of production (L) in the table represents one worker. For example, a total of 3 workers produce a total of 18 units per hour. Using the data provided: a . Complete the table. b . Using the data from the table construct the MRP and the MRC curves at an MRC (wage) of $20.00 per hour with MRP and MRC on the vertical and FPS on the horizontal axis.How many laborers (FPs) would be employed at $ 20.00 per hour? Why? c.If the employer had to increase the hourly rate by $5.00 , how many laborers (FPs) would be employed ? Why?arrow_forward
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