The backward-sloping labor supply curveJuanita has 80 hours per week to devote to working or to leisure. She is paid an hourly wage and can work at her job as many hours a week as she likes.The following graph illustrates Juanita's weekly income-leisure tradeoff. The three lines labeled BC1, BC2, and BC3 illustrate her time allocation budget at three different wages; points A, B, and C show her optimal time allocation choices along each of these constraints.ATTACHED Image Q11aFor each of the points listed, use the preceding graph to complete the following table by indicating the hourly wage at each point and how many hours per week Juanita will spend during leisure activities versus working. WageLeisureLaborPoint(Dollars per hour)(Hours)(Hours)A B C Based on the data you entered in the preceding table, use the orange curve (square symbols) to plot Juanita's labor supply curve on the following graph, showing how much labor she supplies each week at each of the three wages.ATTACHED images Q11bSuppose that Juanita's initial budget line was BC2 and that it then changed to BC3; therefore, Juanita's optimal time allocation choice shifted from B to C. As a result of this change, Juanita's opportunity cost of leisure (decreased or increased), and she chose to consume (less or more) leisure. Consequently, in this region, the (substitution or income) effect dominates the (income or substitution) effect. The corresponding portion of Juanita's labor supply curve is (upward sloping jor backward sloping). ### Labor Supply CurveThe graph presented is a labor supply curve that demonstrates the relationship between wage rates (measured in dollars per hour) and the quantity of labor supplied (measured in hours).#### Graph Details:- **Axes**: - The horizontal axis represents "LABOR (Hours)," ranging from 0 to 60 hours. - The vertical axis represents "WAGE (Dollars per hour)," ranging from $0 to $24.- **Curve**: - An orange line is plotted, indicating the labor supply. It starts from approximately 35 hours and $8 per hour, curves upwards, and ends around 48 hours and $18 per hour.This curve shows an upward slope, suggesting that as wages increase, the quantity of labor supplied also increases. This is typical in labor economics, reflecting the incentive for workers to supply more labor when they are compensated with higher wages. - **Key Insight**: The graph visually summarizes how labor supply may increase in response to rising wage rates, illustrating a fundamental concept in understanding labor market dynamics. The image is a graph that represents the trade-off between leisure hours and income in dollars. It features three budget constraints, labeled as BC₁, BC₂, and BC₃.### Graph Details:- **Axes:** - The horizontal axis represents "Leisure (Hours)" ranging from 0 to 40 hours. - The vertical axis represents "Income (Dollars)" ranging from 0 to 1200 dollars.- **Budget Constraints:** - **BC₁:** This line starts from the point where leisure is 40 hours and income is 0 dollars, extending to where leisure is 0 hours and income is 400 dollars. - **BC₂:** Starting from 40 hours of leisure and 0 dollars income, it extends to 0 hours of leisure and 720 dollars income. - **BC₃:** Begins at 40 hours of leisure with 0 income and extends to 0 hours of leisure with 1200 dollars income.- **Points on the Graph:** - **Point A:** Located on BC₁, it corresponds to approximately 33 hours of leisure and 120 dollars of income. - **Point B:** Found on BC₂, it is positioned at approximately 30 hours of leisure and 360 dollars of income. - **Point C:** Located on BC₃, this point is at approximately 26 hours of leisure and 780 dollars of income.### Explanation:This graph illustrates how different budget constraints affect the allocation of time between leisure and income-generating activities. Each budget line represents a different level of potential income, suggesting higher income with decreased leisure as one moves from BC₁ to BC₃. Points A, B, and C demonstrate specific choices of leisure and income under each budget constraint.

Labor market equilibrium is the state in which the quantity of labor demanded by employers is equal…

Juanita has 80 hours per week to devote to working or to leisure. She is paid an hourly wage and can work at her job as many hours a week as she likes. The following graph illustrates Juanita's weekly income-leisure tradeoff. The three lines labeled BC1, BC2, and BC3 illustrate her time allocation budget at three different wages; points A, B, and C show her optimal time allocation choices along each of these constraints. ATTACHED Image Q11a For each of the points listed, use the preceding graph to complete the following table by indicating the hourly wage at each point and how many hours per week Juanita will spend during leisure activities versus working. Wage Leisure Labor Point (Dollars per hour) (Hours) (Hours) A B C Based on the data you entered in the preceding table, use the orange curve (square symbols) to plot Juanita's labor supply curve on the following graph, showing how much labor she supplies each week at each of the three wages. ATTACHED images Q11b Suppose that Juanita's initial budget line was BC2 and that it then changed to BC3; therefore, Juanita's optimal time allocation choice shifted from B to C. As a result of this change, Juanita's opportunity cost of leisure (decreased or increased), and she chose to consume (less or more) leisure. Consequently, in this region, the (substitution or income) effect dominates the (income or substitution) effect. The corresponding portion of Juanita's labor supply curve is (upward sloping jor backward sloping).

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 backward-sloping labor supply curve

Juanita has 80 hours per week to devote to working or to leisure. She is paid an hourly wage and can work at her job as many hours a week as she likes.

The following graph illustrates Juanita's weekly income-leisure tradeoff. The three lines labeled BC1, BC2, and BC3 illustrate her time allocation budget at three different wages; points A, B, and C show her optimal time allocation choices along each of these constraints.

ATTACHED Image Q11a

For each of the points listed, use the preceding graph to complete the following table by indicating the hourly wage at each point and how many hours per week Juanita will spend during leisure activities versus working.

	Wage	Leisure	Labor
Point	(Dollars per hour)	(Hours)	(Hours)
A
B
C

Based on the data you entered in the preceding table, use the orange curve (square symbols) to plot Juanita's labor supply curve on the following graph, showing how much labor she supplies each week at each of the three wages.

ATTACHED images Q11b

Suppose that Juanita's initial budget line was BC2 and that it then changed to BC3; therefore, Juanita's optimal time allocation choice shifted from B to C. As a result of this change, Juanita's opportunity cost of leisure (decreased or increased), and she chose to consume (less or more) leisure. Consequently, in this region, the (substitution or income) effect dominates the (income or substitution) effect. The corresponding portion of Juanita's labor supply curve is (upward sloping jor backward sloping).

### Labor Supply Curve

The graph presented is a labor supply curve that demonstrates the relationship between wage rates (measured in dollars per hour) and the quantity of labor supplied (measured in hours).

#### Graph Details:

- **Axes**:
- The horizontal axis represents "LABOR (Hours)," ranging from 0 to 60 hours.
- The vertical axis represents "WAGE (Dollars per hour)," ranging from $0 to $24.

- **Curve**:
- An orange line is plotted, indicating the labor supply. It starts from approximately 35 hours and $8 per hour, curves upwards, and ends around 48 hours and $18 per hour.

This curve shows an upward slope, suggesting that as wages increase, the quantity of labor supplied also increases. This is typical in labor economics, reflecting the incentive for workers to supply more labor when they are compensated with higher wages.

- **Key Insight**: The graph visually summarizes how labor supply may increase in response to rising wage rates, illustrating a fundamental concept in understanding labor market dynamics.

The image is a graph that represents the trade-off between leisure hours and income in dollars. It features three budget constraints, labeled as BC₁, BC₂, and BC₃.

### Graph Details:

- **Axes:**
- The horizontal axis represents "Leisure (Hours)" ranging from 0 to 40 hours.
- The vertical axis represents "Income (Dollars)" ranging from 0 to 1200 dollars.

- **Budget Constraints:**
- **BC₁:** This line starts from the point where leisure is 40 hours and income is 0 dollars, extending to where leisure is 0 hours and income is 400 dollars.
- **BC₂:** Starting from 40 hours of leisure and 0 dollars income, it extends to 0 hours of leisure and 720 dollars income.
- **BC₃:** Begins at 40 hours of leisure with 0 income and extends to 0 hours of leisure with 1200 dollars income.

- **Points on the Graph:**
- **Point A:** Located on BC₁, it corresponds to approximately 33 hours of leisure and 120 dollars of income.
- **Point B:** Found on BC₂, it is positioned at approximately 30 hours of leisure and 360 dollars of income.
- **Point C:** Located on BC₃, this point is at approximately 26 hours of leisure and 780 dollars of income.

### Explanation:

This graph illustrates how different budget constraints affect the allocation of time between leisure and income-generating activities. Each budget line represents a different level of potential income, suggesting higher income with decreased leisure as one moves from BC₁ to BC₃. Points A, B, and C demonstrate specific choices of leisure and income under each budget constraint.

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