Suppose that a consumer cannot vary hours of work as he or she chooses. In particular, he or she must choose between working g hours and not working at all, whereg> 0. Suppose that dividend income is zero, and that the consumer pays atax Tif he or she works, and receives a benefit b when not working, interpreted as an unemployment insurance payment.a Click the icon to view information about the initial model used here.Consumption, CW29-Tw,q-TLeisure, Ih-gBEa. If the wage rate increases, how does this affect the consumer's hours of work? What does this have to say about what we would observe about the behaviour of actual consumers when wages change?After the wage rate increases, an individual consumer who originally did not work at allV After the wage rate increases, an individual consumer who originally worked q hoursV This suggests that if an economy includes many consumers with manydifferent sets preferences (all satisfying the assumptions of the initial model) and the wage rate increases, then overall the quantity of labour suppliedb. Suppose the unemplayment insurance benefit increases. How will this affect hours of work? Explain the implications of this for unemployment insurance programs.After the unemployment insurance benefit increases, an individual consumer who originally did not work at allVAfter the unemployment insurance benefit increases, an individual consumer who originallyworked g hoursV This suggests that if an economy includes many consumers with many different sets preferences (all satisfying the assumptions of the initial model) and the wage rate increases, thenoverall the quantity of labour supplied - this have to say about what we would observe about the behaviour of actual consumers when wages change?sumer who originally worked q hoursThis suggests that if an economy inclurate increases, then overall the quantitork? Explain the implications of this forwould certainly choose to work 0 hours.rance benefit increases, an iny did not work at allwould certainly choose to work q hours.otions of the initial model) andEomy includes many consumers with marmight choose to work q hours or 0 hours.

The individual can spend the time available for two purposes: either work, or use it for leisure.

Answered: the consumer's hours of work? What does…

the consumer's hours of work? What does this have to say about what we would observe about the behaviour of actual consumers when wages change?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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