4. Winona has 80 hours to divide between leisure and labor. Her utility function is u(r,c) =f(r) + c, when r represents hours of leisure, c represents dollars of consumption, and fisstrictly concave. Winona's wage is wo = $15/hr. initially, then it rises to wi = $20/hr.(i) Explain what happens to Winona's labor supply when the wage rises, and why.(ii) Explain how the answer to (i) would change if Winona were to win a lottery.

In the question above, it is given that : 80 hours are divided between leisure and labor. Utility…

Answered: 4. Winona has 80 hours to divide…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Kimo is a parent who has $200 in non-labor income. Kimo can earn $10 per hour working between 0 and 60 hours in a week if he works. Draw and label clearly the potential income constraint diagram faced by Kimo What is the slope of the budget constraint
23. A worker has utility over consumption c and leisure I given by U(c,1) = a 6-6 + 18 where 0 << 1 She has T hours to allocate between leisure and work. For each hour she works, she earns a wage of w to spend on consumption c. The price of c is 1. She also receives an additional 'non-labor income' m regardless of how much she works. She maximizes utility subject to the following constraints: contact@cloure.m Assume interior solution, then cw(T-1) +m C≥O 0≤1≤T A. c is normal and I is inferior good. B. c is inferior and I is inferior good. C. c is inferior and I is normal good. D. c is normal and I is normal good. Page 8
21. Let U=x 2 +y 2 is the utility function of a worker who has 10 hours that to be allocatedbetween labour supply (L) and leisure (x). Let y is a consumption good whose price is 1.Wage rate (w) is Rs 1 and non-wage income is 20. Find out L.a) 10 b) 0 c) 5 d) 8 e) none 22. On the basis of the above question, hen w=0 and non-wage income is 40, find out L.a) 10 b) 0 c) 5 d) 8 e) none
3. Consider the economic model of an individual's labor-leisure choice with the following components: C represents units of the consumption good L represents hours of leisure H represents hours of paid work p represents the unit price of the consumption good w represents the hourly wage rate Y represents nonlabor income T represents total time available U(C, L) represents the individual's utility function MUC denotes the marginal utility of consumption MUL denotes the marginal utility of leisure Unless otherwise instructed, assume that consumption and leisure are normal goods. Whenever graphi the model, put C on the vertical axis and L on the horizontal axis. What is the slope of the budget line? -(MUC/MUL) O-(MUL/MUC) O-W O -(w/p) O-(w+Y)/p
Eva runs a small bakery in the village of Roggerli. She is debating whether she should extend her hours of operation. Eva figures that her sales revenue will depend on the number of additional hours the bakery is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $12 per hour. Refer to Table 1-1. Using marginal analysis, how many hours should Eva extend her bakery's hours of operations? 2 hours 3 hours 4 hours 5 hours
In any given week, Anne receives satisfaction only from the consumption of goods and from the consumption of leisure L, which is measured in hours. Obviously, Anne consumes many different types of goods, but for simplicity we aggregate the dollar value of all the goods that she consumes during the week and call it C. Assume that if Anne chooses to work, the hourly wage rate is w=9 and she has to sleep 8 hours per day. (Sleeping time is not considered leisure.) Potentially, if she wants, she can work up to 7 days a week.
Relate the concept of marginal rate of substitution back to the idea of willingness to pay and economic return. In particular... If my MRS2 for1|> ERS2 for 1| can I receive additional economic return by reallocating by budget away from one commodity and towards another? If so, how? Why? Please include a diagram in your answer.

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