04 Jun Question Theory of Labor Economics
Question
Theory of Labor Economics
1. If the substitution effect is larger than the income effect, what will be the labour-supply response to an increase in the income-tax rate? (Recall that income taxes are a percent of income, not a fixed sum.)
(a) Labor supply will remain unchanged.
(b) Labor supply will change ambiguously.
(c) Labor supply will increase.
(d) Labor supply will decrease.
2. Demonstrate that a monopsonistic employer will not pay each worker her marginal revenue product.
3. Suppose your firm produces according to a function in which capital and labour are perfect compli- ments. The wage rate is currently $120 per day and the daily capital cost is $100. If the wage rate falls to $100, does the substitution effect dominate the scale effect and ensure that more capital is used? Explain and justify your answer.
4. There are 16 hours daily to be divided between working for pay and leisure. Working yields hourly wages of $10. Any hours worked in excess of eight hours are considered overtime, and are compensated at $15 hourly.
(a) In the space below, produce the budget constraint implied by this scenario, inclusive of clear and complete labels on all axes, lines, and intersections.
(b) In the same space, introduce a utility-maximizing agent who is optimally choosing to work 8 hours.
(c) In the same space, capture the effect of a program that pays workers a flat $30 for staying after their eight-hour shift to finish up any remaining tasks. If they finish their task, they can leave and keep the full $30 payment. If the task ends up taking longer than two hours, they can continue to earn overtime at the regular rate of $15 hourly.
(d) Demonstrate, with another indifference curve, what are the expected labor-supply implications of such a policy would be.
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.