Assume Bob’s initial equilibrium position is at point A. Next, assume that Bob’s budget line rotates upwards Income480I2CB240ALeisure Hour161824 1. What is Bob's initial and new wage rates? (Show the calculation).2. Based on the above diagram, what is thei.income effect,ii.substitution effect,net effect that is caused by the change in wage rate?State the movement from one point to another for each of the effects.3. What is your conclusion about the relative strength of the income effect and substitutioniii.effect?

Part a) When leisure is zero , Bob work for 24 hours and can get an income of 240. Therefore ,…

1. What is Bob's initial and new wage rates? (Show the calculation). 2. Based on the above diagram, what is the i. income effect, substitution effect, ii. net effect that is caused by the change in wage rate? State the movement from one point to another for each of the effects. 3. What is your conclusion about the relative strength of the income effect and substitution ii. effect?

1. What is Bob's initial and new wage rates? (Show the calculation). 2. Based on the above diagram, what is the i. income effect, substitution effect, ii. net effect that is caused by the change in wage rate? State the movement from one point to another for each of the effects. 3. What is your conclusion about the relative strength of the income effect and substitution ii. effect?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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