Suppose Aldo makes €8 an hour for the first 40 hours a week, and €12 an hour for any hours above 40(overtime). He has no non-labour income, and he chooses to work 50 hours a week.a. Graph this equilibrium. What is his marginal rate of substitution?b. Suppose the government prohibits overtime pay. Now, Aldo's pay is €8 an hour regardless of thenumber of hours worked. If Aldo reduces his hours of work from 50 to 40 after the governmentchange, has his utility increased or decreased relative to the equilibrium in part a? Briefly explain.

Indifference curve analysis can be used to explain why people prefer income over leisure, and why a…

Answered: Suppose Aldo makes €8 an hour for the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In Okennewick, 180 people are willing to spend an hour working as pizza makers for an hourly wage of $20. For each additional $5 that the wage increases above $20, an additional 45 people are willing to spend an hour working. For hourly wages of $20, $25, $30, $35, and $40, plot the daily labor supply curve for pizza makers on the following graph. WAGE (Dollars per hour) 50 45 40 35 25 20 15 10 5 0 0 45 + 90 135 180 225 270 315 LABOR (Number of workers) 360 405 450 Supply What is one explanation for why this labor supply curve is upward sloping? The opportunity cost of leisure increases as wages increase. Labor production functions exhibit diminishing marginal returns. Wages have to increase to accommodate union pressure. O Firms are willing to hire more pizza makers at a lower wage.
When deriving labour supply, we assumed that the substitution effect dominated the income effect. What impact would there be on labour supply if this was not the case? Briefly investigate how such a change could theoretically affect the imposition of a minimum wage. (Your answer is likely to benefit if it is supported by a diagram.)
Can you show the effect the the budget set for b and c diagramatically please
Suppose that this conveyor-manufacturing firm has another location and would like you to evaluate the input mix decisions at this new location. Here is all you know about the newlocation. The marginal rate of technical substitution is currently 0.5. The marginal product of labor at its target level of output is 60 rollers per hour. What is the marginal product of capital? Ifthe rental rate for capital is $24 per hours at this location and the wage paid to labor is $12 per hour, could this location be minimizing the costs of producing its target level of output? Explain briefly.
plz answer both are question correct explain
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According to the Economics Policy Institute (Mishel and Wolfe, 2019) CEO pay has grown 940% since 1978 while the compensation of the average worker has only risen 12%. While you can easily find sources that provide statistics that conflict with these numbers, you would be hard pressed to find any credible source that refutes the idea that the rate of pay of CEO’s and other upper-level managers has not dramatically increased relative to an organization’s lower-level employees in just about any 10 or more year period over the past 60 years. In the world of Adam Smith, the “invisible hand” of the free market capitalistic model would address inequities/out of balances. Are the forces represented by the “invisible hand” working? Why or why not? Is there an ethical dimension to the discussion of upper-level manager compensation? Why or why not? How does (or does it?) levels of pay of upper management impact the rest of us commoners?
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 fis strictly 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.
Lance lives in Williston, North Dakota. The firms in town, such as the Walmart, pay teenagers without a high school degree the federal minimum wage of $7.25 an hour. Because his parents provide him Y (mostly in the form of room and board), Lance chooses to stay in school and not work. However, a new fracking firm starts production nearby so the wage rises to three times the minimum wage. Use a labor-leisure choice figure to show why he does not work initially but then works a substantial number of hours at the higher wage. Draw Lance's original budget constraint and show that he does not choose to work. The firms in town, such as the Walmart, pay teenagers without a high school degree the federal minimum wage of $7.25 an hour. Assuming the price of consumption is $1.00, what is the slope of Lance's original budget constraint? The slope of Lance's original budget constraint is places.) (Round your response to two decimal C
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38. For the production function y = 3x₁ + 4x2 , which of the two inputs is more productive when x₁ is 1 and x₂ is 10 ? O. X1 O. X2 O. neither ; for this situation , they have equal marginal products O. cannot tell from the above information 39. Given the production function y = 3x₁ + 4x2 , what is the marginal rate of technical substitution of x₁ for x₂ ( MRSx1x2 ) when x₁ is 5 and x₂ is 5 ? O. -0.75 O. -x1 / 5 O. 5 O. -5

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