11) An increase in the wage rate means that the
12) There is a negative relationship between the price of labor and the quantity of labor supplied, ceteris paribus.
13) We can easily predict whether an increase in the wage will cause a worker to demand more leisure time or less leisure .
14) As the dollar prizes for professional golf tournaments have increased, professional golfers have entered fewer tournaments per year. Is this type of behavior consistent with utility maximization? Explain.
15) Explain the income effect and the substitution effect due to an increase in the wage rate.
16) Tyler's wage rises and he chooses to increase the number of hours he supplies to the labor market. What does this imply about the relative sizes of the substitution effect and the income effect? Explain.
17) Comment on the following statement: "An increase in the wage always leads to an increase in the quantity of labor supplied."
18) Suppose that you currently work 20 hours a week at $10 per hour and your employer tells you he must reduce your wage to $8 per hour. Using the concept of income and substitution effects, explain how you might react.
19) How does occupational licensing affect the labor market for a particular occupation?
Step by step
Solved in 3 steps
