Based on this model, households earn income whenpurchasein factor markets.Suppose Yvette earns $525 per week working as a pilot for Wingies. She uses $9 to take a yoga class at Big Bend. Big Bend pays Sean $500 per weekto instruct yoga. Sean uses $300 to purchase international flights from Wingies.Identify whether each of the following events in this scenario occurs in the factor market or the product market.EventYvette earns $525 per week working for Wingies.Yvette spends $9 to take a yoga class.Sean spends $300 to purchase international flights from Wingies.Factor Market Product MarketоOWhich of the elements of this scenario represent a flow from a firm to a household? This could be a flow of dollars, inputs, or outputs. Check all thatapply.Yvette's laborThe $500 per week Sean earns working for Big BendThe $300 Sean spends to purchase international flights from WingiesThe yoga class Yvette receives

1. Yvette earns $525 per week working for Wingies.This occurs in the factor market. Yvette is…

Answered: Based on this model, households earn…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.15P

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Hannah’s wage rate is initially $10 per hour and she maximises her utility by supplying 8hours of work. Subsequently, her wage rate increases to $15 per hour and her newequilibrium position corresponds to 9 hours of work. It is noted that the income effect (IE)causes the labour supply to change by 1 hour and the substitution effect (SE) causes thelabour supply to change by 2 hours. How to draw in diagram, to show the IE and SE?
Sarah’s weekly wage rate was reduced due to the company she works for cutting staff wage rates. Sarah decided to reduce her weekly working hours. Assume that there are 120 weekly hours available between work and leisure.Draw a diagram to show Sarah’s original and new optimal points and the impact on her welfare.After that redraw your diagram and split the total welfare impact into substitution and income effects.
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Answer the question based on the following graph. Which of the following statements is entirely correct? Tom's monthly budget constraint 40 •D E nts 20 Number of hamburgers per month O Point E is unattainable and Point D is inefficient. O Both point D and E are unattainable. O Point E is inefficient and Point D is unattainable. O Point A is inefficient and Point E is unattainable. « Previous Next Number of hot dogs per month
Juan is currently working in a job that pays $25 an hour and he chooses to work 8 hours per day. Assume that Juan can work a maximum of 16 hours a day, and he has complete flexibility in how many hours a day he works. Illustrate Juan’s budget constraint and his optimal choice of consumption and leisure. What is the slope of his budget constraint? What does this slope represent? (As on any graph you draw, make sure that you label the axes, the intercepts and the optimal choice.) Juan begins receiving a government transfer payment of $100 per day. Add his new budget constraint to your graph in (a) and show his new optimal choice. Does he choose more or less consumption? More or less leisure? Explain why for both goods. The government imposes a tax of 25% on Juan’s earnings from work and increases his government transfer to $150 per day (the government transfer payment is not taxed.) Redraw the budget constraint from part (b) (omit the part (a) budget constraint), and add a new budget…
Suppose Janet earns $600 per week working as a doctor for the Medical Clinic. She uses $9 to order a mojito cocktail at Little Havana. Little Havana pays Felix $300 per week to wait tables. Felix uses $175 to purchase medical services from the Medical Clinic. Identify whether each of the following events in this scenario occurs in the market for factors of production or the market for goods and services. Event Market for Factors of Production Market for Goods and Services Janet spends $9 to order a mojito cocktail. Janet earns $600 per week working for the Medical Clinic. Felix earns $300 per week working for Little Havana. Which of the elements of this scenario represent a flow from a firm to a household? This could be a flow of dollars, inputs, or outputs. Check all that apply. a. The $300 per week Felix earns working for Little Havana b. Janet's labor c. The mojito Janet receives True or False: For the economy…
Selena has utility U=lnX + 2lnY Calculate the formula for her marginal rate of substitution between X and Y, showing your work.
SOLVE PART b First and second welfare theorems There are two goods A and B and two inputs K and L. The production functions are Ya=AKaαLa1-α Yb=BKbβLbβ The production functions display the standard properties including constatnt returns to scale A representative household has utility U(ca,cb) where ci is the consumption of good i. The total supply of each factor is fixed. K=Ka+Kb L=La+Lb a) A social planner allocates consumption of both goods and determines production and allocation of inputs. Derive the optimal allocation and demonstrate the marginal rate of substitution is equal to the marginal rate of transformation between the consumption goods. Draw a graph of the production possibility frontier. b) Now assume a maret system i. Households own the labor and capital which is rented to firms. The households face a budget constraint waLa+wbLb+raKa+≥PaCa+PbCb where wi is the real wage paid in industry i and ri is the rental rate in industry i. The total supply of each factor is fixed,…
What occurs according to Moore's law? Multiple Choice The power of microprocessor technology doubles and its cost of production falls in half every 18 mon The demand for microprocessor technology falls in half every 18 months. The demand for microprocessors continues to rise, while their supply falls. The price of microprocessors continues to fall, while their cost of production increases The cost of microprocessors increases as their power increases
Mika earns $395 per week which she spends entirely at the grocery store, purchasing either food or alcohol. The price of food is $1/unit, while the price of alcohol is $5/unit. If Mika receives an additional $71/week in food stamps that can only be used to buy food at the grocery store (so, this money could be used to buy food but NOT alcohol), what is the slope of Mika's budget constraint at the point where the constraint intersects the vertical axis, were she to graph quantity of food on the horizontal axis and quantity of alcohol on the vertical axis? (Note: The numbers may change between questions, so read carefully).
Suppose the price of bananas falls. Explain how the income and substitution effects work in the adjustment to a new level of banana consumption.

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