2. Assume that in the state of Kentucky, Bill is guaranteed S400 of welfare benefits if he does not work at all.They are allowed a disregard of $100 and face a tax rate of 50%. He has a nonlabor income equal to zeroand if the works he can carn a wage of $10 per hour. His total time is 200 hours a woek.a. How many hours of leisure is Bill consuming at his break even point?b. Graph the budget constraint, labeling the break even point and other breaks in the curve as well asslopes of each line. Draw Bill's indifference curves such that he chooses to work 5 hours a month.

The framework of neoclassical model of labor-leisure choice helps in analyzing the factors that…

2. Assume that in the state of Kentucky, Bill is guaranteed $400 of welfare benefits if he does not work at all. They are allowed a disregard of $100 and face a tax rate of 50%. He has a nonlabor income equal to zero and if the works he can earn a wage of $10 per hour. His total time is 200 hours a week. a. How many hours of leisure is Bill consuming at his break even point? b. Graph the budget constraint, labeling the break even point and other breaks in the curve as well as slopes of each line. Draw Bill's indifference curves such that he chooses to work 5 hours a month.

2. Assume that in the state of Kentucky, Bill is guaranteed $400 of welfare benefits if he does not work at all. They are allowed a disregard of $100 and face a tax rate of 50%. He has a nonlabor income equal to zero and if the works he can earn a wage of $10 per hour. His total time is 200 hours a week. a. How many hours of leisure is Bill consuming at his break even point? b. Graph the budget constraint, labeling the break even point and other breaks in the curve as well as slopes of each line. Draw Bill's indifference curves such that he chooses to work 5 hours a month.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Questions and Problems 6. An individual can earn $12 per hour if he or she works. Draw the budget constraints that show the monthly consumption-leisure trade-off under the following three welfare programs. a. The government guarantees $600 per month in income and reduces the benefit by $1 for each $1 of labor income.
Refer to the following diagram which reflects Sam's tradeoffs of income and leisure: $240 Income $192 0 15 16 17 24 Leisure
A1: Illustrate and discuss how a change in the price of a commodity cangenerate income and substitution effects.
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?
A person is a gig worker and can choose whether and how much he works each day. If he does work, his hourly wage is $20 per hour. Today he decides to work 8 hours. 1. He chooses point (enter A, B or C). 2. The value for W is| (enter whole numbers without the comma). 3. The value for X is 4. He consumes hours of leisure. Enter whole numbers without decimal points or dollar signs, e.g. enter $30,000 as 30000. Income/Consumption IC TC, 24 Leisure Today (hours) SO
P2
Q5 plz help quick The marginal rate of substitution of nickels for dimes is O negative and constant. O negative but varies from point to point on a given indifference curve. O zero. positive but decreases as the number of Nicole's increases
Teresa spends her entire scholarship of PLN 600 for the purchase of drinks and food. 1. Draw Teresa's budget restraint line knowing that her favorite drink costs 5 zlotys per bottle and the dinner price is 20 zlotys. 2. How will Teresa's situation be affected by the increase in dinner price to PLN 25? 3. What will happen if the price of the drink is reduced to PLN 2.5? 4. Assess following quantitative combinations: •125 drinks i 20 dinners •80 drinks i 20 dinners •40 drinks i 20 dinnes
CHAPTER 6 Household Behavior and Consumer Choice 127 E 8. Decide whether you agree or disagree with each of the following statements and explain your reason: a. If the income effect of a wage change dominates the substitu- tion effect for a given household and the household works longer hours following a wage change, wages must have risen. b. In product markets, when a price falls, the substitution effect leads to more consumption; but for normal goods, the income effect leads to less consumption. 9. Suppose the price of X is $5 and the price of Y is $10 and a hypo- thetical household has $500 to spend per month on goods X and Y. a. Sketch the household budget constraint. b. Assume that the household splits its income equally between X and Y. Show where the household ends up on the budget constraint. c. Suppose the household income doubles to $1,000. Sketch the new budget constraint facing the household. d. Suppose after the change the household spends $200 on Y and $800 on X. Does…
13. Explain Figure 3 – what would be the utility maximizing point if a person has a steeper indifference curve. Explain relevant points and draw indifference curves to explain no change in work hours. The Welfare System with a Work Requirement (Workfare) Income E Y C 16 Hours of Leisure O Hours of Work 10 16 6 Figure 3
3.
7. Suppose that you can earn $16 per hour before taxes and can work up to 80 hours per week. Consider two income tax rates, 10% and 20%. a. On the same diagram, draw the two weekly consumption-leisure budget constraints reflecting the two different tax rates. b. Draw a set of representative indifference curves such that the income effect of the tax increase outweighs the substitution effect. c. Draw a set of representative indifference curves such that the substitution effect of the tax increase outweighs the income effect.