Consider the figure to the right, where Joe initially maximizes utility atconsumption-leisure combination R along budget constraint L¹.Suppose Joe's wage doubles.1.) Use the line drawing tool to draw Joe's new budget constraint with the higherwage. Label this line 'L².2.) Use the point drawing tool to identify the new utility-maximizing consumption-leisure bundle for Joe. Label this point 'T'.Carefully follow the instructions above, and only draw the required objects.The substitution effect causes Joe to workThe income effect causes Joe to workhours.hours.The combined income and substitution effects cause Joe to workhours.Income (Market value of goods) per day240-220-200-180-160-140-1120-100-580-£2R60-340-20-10--00-2468 10 12 14 16 18 20 22 24 26Leisure hours per day

Based on the analysis of the image and the calculations performed, I can provide you with the…

Answered: Consider the figure to the right, where…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The consumer's utility function for Consumption (C) and Leisure (L) is given as U(C,L) = √CLHis hourly wage is $10, non-labor income is $20; and he has a total of 16 hours to allocate between labor and leisureBased on this information, the consumer's total utility at the optimal level (or optimal C,L combination) is:a. 57.0 utilsb. 28.5 utilsc. 99.75 utilsd. 114.5 utilse. Cannot be determined with the information given I prefer typed answers.
3) Diminishing marginal rate of substitution can be seen when indifference curves A) become flatter as we move down and to the right. B) are downward sloping. cross. D) are concave. 4) If the consumer's non-labor income increases while wages remain unchanged, what will happen to the budget line? A) The budget line shifts inward without a change in slope. B) The budget line rotates inward from the intercept on the horizontal axis. C) The budget line rotates outward from the intercept on the vertical axis. D) The budget line shifts outward without a change in slope.
Suppose that there are two goods, gl and g2, that Jane consumes. Demand functions for these two goods are given as follows: gl * = gl(pg1), pg2 ,Inc) g2 * = g2(pg1), pg2 ,Inc) where pg1, pg2 ,Inc refer prices of the goods and income, respectively. Explain and demonstrate (on the graph) the substitution and income effect for both an increase and decrease in price good g1. Use the notations given in the question.
answer each question
Two individuals, Blair and Anton, derive utility from leisure and from the other goods (OG) they consume. Observing their leisure and OG choices when wage increases, we conclude that Blair has backward-bending labour supply and Anton has upward slopping labour supply. Therefore, Select all that applies a) Leisure is a normal good for Anton but an inferior good for Blair. b) Anton has only an income effect, while Blair has only a substitution effect. O C) Anton's income effect is larger than Blair's income effect, but Anton's substitution effect is smaller than Blair's substitution effect. O d) Anton's substitution effect is larger than his income effect, but Blair's income effect is larger than her substitution effect. O e) Anton's income and substitution effects are negative while Blair's income and substitution effects are positive.
Please don't use Ai solution
just answer the part e notice that you can do part e without the answer of abcd.
Please provide an explanation. Thanks note: slope must be negative
Andre has a salary of $1000. He spends his entire budget on shoes and beers. The cost for a pair of shoes is $15 and the cost for can of beer is $25. 1. Construct Andre’s budget constraint (place) beers on the y-axis 2. Suppose Andre’s salary rises by 25%. Also suppose that the price of shoes and beers each rise by 40%. Construct Andre’s new budget constraint. What is the difference between the new and old budget constraints?
Each day, Luke must decide his leisure hours, L, and his consumption, C. His utility function is given by the following equation U(L, C) = (C – 30)(L – 12). Luke receives $50 welfare payment per day. Show all the steps, with definition of every new notation used in the steps. a) Suppose that Luke's hourly wage is $5. Find Luke's daily budget constraint equation and graph it. b) If Luke's wage is $5 per hour worked, what is Luke's optimal consumption, (L*, C*)? · c) Assume that the wage is an unknown variable, w. What is Luke's leisure demand L(w)?- d) What is Luke's reservation wage, the lowest wage Luke is willing to work for? -
Mrs. Griffiths earns $5000 a week and spends her entire income on dresses and handbags, since these are the only two items that provide her utility. Furthermore, Mrs. Griffiths insists that for every dress she buys, she must also buy a handbag. Draw an indifference curve showing the optimum choice. Label the optimum as point A. What would be the marginal rate of substitution at the point that corresponds to the optimal consumption choice? Interpret the marginal rate of substitution
2. Lola consumes good x and y, and her marginal rate of substitution is 3/2, regardless of how many units of x and y that she consumes. Assume Lola has an income of $200 and that P-$5. (a.) Find Lola's optimal consumption bundle when px = 6. (b.) Find Lola's demand for x as a function of p,, assuming the price can be any non- negative amount.

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