Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Question
Chapter 4, Problem 4.6P
a)
To determine
Whether the utility results in the same optimal choices as in example 4.1 and whether any choice can result in z>0.
b)
To determine
The way that indicates whether z = 0 is optimal in this case
c)
To determine
How high an individual’s income would need to be for any z to be purchased
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Qd 15,000,000 12,000,000 9,000,000 6,000,000 3,000,000
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Market Efficiency & Total Surplus
Worth Publishers
SCENARIO:
The state government is considering raising the minimum
wage from $15 per hour to $20 per hour over the next 3
years. As an economic advisor to the governor, you have been
asked to provide a recommendation on whether the minimum
wage should be increased based on economic theory.
Consider the labor market data provided.
Prepare a brief report that:
1. Explains whether the labor market is currently efficient at the
equilibrium wage of $15 per hour. How would you know? At
equilibrium, what (dollar amount) is the Total Surplus this market
provides? Show your rationale with numbers.
2. Analyzes the impact on total surplus in the market if the
minimum wage is raised…
Draw the IS-LM diagram at equilibrium and use it to show how one or both of the curves change based on the following exogenous changes.
An increase in taxes.
An increase in the money supply
An increase in government purchases
Don't use Ai.
Answer in step by step with explanation.
Chapter 4 Solutions
Microeconomic Theory
Knowledge Booster
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