Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Question
Chapter 16, Problem 16.12P
a)
To determine
To find:
Equilibrium price and number of pelts to be traded.
b)
To determine
To know:
Equilibrium in pelt market.
c)
To determine
To know:
Equilibrium in pelt market.
c)
To determine
To plot:
Graphical representation of equilibrium in market.
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Consider the following one period model
Consumer
Utility function over consumption (C) and leisure (L)
11
U(CL) = cL3
Total hours H = 50
Labour hours N= H-L
Non-labour income m
Lump-sum taxT
Hourly wage w
Eirm
Production function Y = zF(N) = 2N°
Total tactor productivitiy. z= 5
Government
Government spending (exogenous): G = 30
Suppose that the total factor productivity, z, decreases to 3. What is the income effect of this wage change on labour supply(N
O A 840
B. +6.40
OC. +8.40
D. 6 40
E. None of the above
Recall that leisure time in our model of the representative consumer is intended to capture any time spent not working in the market, including production at home, such
as yard work and caring for children. Suppose that the government were to provide free day care for children and, for the purpose of analyzing the effects of this,
assume that this has no effect on the market real wage w, taxes T, and dividend income . Assume that initially the representative consumer uses some but not all
available time for leisure, and assume that the consumer is indifferent between time leisure time spent caring for children and leisure time spent in other ways.
Determine the effects of the daycare program on consumption, leisure (including government-provided daycare services), and hours worked for the consumer.
Click the icon to view information about the initial model used here.
In this case, the substitution effect
V in consumption and
in
leisure, and the income effect
V in consumption and
V in…
3. Assume representative agent's utility function takes form:
e(1- s(t))h(t)dt
max
where 0 < s(t) < 1 denotes schooling time. h(t) is human capital level in t. Human
capital accumulation technology is given as:
hit) = óh(t) H(t)s(t) - ôh(t)
1
where o is a constant, 0 <7< 1, 6 is human capital depreciation rate, and H(t) is the
average human capital stock in the economy. Derive the growth rate of human capital
and s" on the balanced growth path.
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