Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 6, Problem 4.4P
To determine
Income and substitution effect generated by Uber.
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Timur works 40 hours a week in a job with an hourly wage of 20 TL. Due to the pandemic, it decided to withdraw from the market after the hourly wage decreased to 15 TL. Show the income or substitution effect with the graph according to Timur's preferences and explain the graph.
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Jack currently works 38 hours per week at a wage rate of $15 per hour. His marginal rate of substitution is $20 per hour. Is Jack's utility maximized? If yes, explain why. If no, explain why not and discuss what Jack should do in order to further increase utility.
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Principles of Economics (12th Edition)
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- 11. Calculating the price elasticity of supply Hubert is a retired teacher who lives in San Diego and teaches tennis lessons for extra cash. At a wage of $30 per hour, he is willing to teach 6 hours per week. At $50 per hour, he is willing to teach 16 hours per week. Using the midpoint method, the elasticity of Hubert’s labor supply between the wages of $30 and $50 per hour is approximately , which means that Hubert’s supply of labor over this wage range is .arrow_forward11. Calculating the price elasticity of supply Nick is a volunteer fire fighter living in Chicago who coaches youth soccer to supplement their normal income. At an hourly wage rate of $15, they are willing to coach 5 hours per week. Upping the wage to $25 per hour, they are willing to coach 14 hours per week. Using the midpoint method, the elasticity of Nick's labor supply between the wages of $15 and $25 per hour is approximately means that Nick's supply of labor over this wage range is , whicharrow_forwardSay whether you agree or disagree with this statement and explain your reason: “If the income effect of a wage change dominates the substitution effect for a given household, and the household works longer hours following a wage change, wages must have risen.”arrow_forward
- 11. Calculating the price elasticity of supply Frances is a graduate student living in Denver who works as a caddy to supplement their normal income. At an hourly wage rate of $40, they are willing to caddy 9 hours per week. Upping the wage to $55 per hour, they are willing to caddy 17 hours per week. Using the midpoint method, the elasticity of Frances's labor supply between the wages of $40 and $55 per hour is approximately means that Frances's supply of labor over this wage range is , whicharrow_forwardOnly typed answerarrow_forward11. Calculating the price elasticity of supply Caroline is a retired teacher living in Detroit who coaches youth soccer to supplement their normal income. At an hourly wage rate of $15, they are willing to coach 3 hours per week. Upping the wage to $30 per hour, they are willing to coach 8 hours per week. Using the midpoint method, the elasticity of Caroline's labor supply between the wages of $15 and $30 per hour is approximately that Caroline's supply of labor over this wage range is F which means Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
- One winter recently, the price of a cruise increased by 10 percent and the quantity demanded decreased by 15 percent, and with no change in the price of cruise wear, the quantity of cruise wear demanded decreased by 20 percent. What is the cross elasticity of demand for cruise wear with respect to the price of a cruise? Are a cruise and cruise wear substitutes or complements? Why? The cross elasticity of demand for cruise wear with respect to the price of a cruise is >>> Answer to 1 decimal place. Cruises and cruise wear are because O A. substitutes; the cross elasticity of cruise wear with respect to the price of a cruise is positive O B. substitutes; the cross elasticity of cruise wear with respect to the price of a cruise is negative O C. complements; the cross elasticity of cruise wear with respect to the price of a cruise is positive O D. complements; the cross elasticity of cruise wear with respect to the price of a cruise is negative O E. complements; the price elasticity of…arrow_forwardShowhowthe indifference curve for perfect complements is illustrated. What can you tell about the marginal rate of substitution of perfect complements? Give an example for perfect complements.Showhowthe indifference curve for perfect substitutes is illustrated. What can you tell about the marginal rate of substitution of perfect substitutes? Give an example for perfect substitutesarrow_forwardTo determineChange in price of substitute and its effect on the demand curve.arrow_forward
- Draw a new figure depicting the following situation: The weather is suddenly unseasonably hot and at the same time the wage of ice-cream salespeople increases.Explain your figure, and report on your new equilibrium price and quantity.arrow_forwardDiscuss the possible substitution effect and the income effect of an increase in income on leisure time.arrow_forwardSarah’s weekly wage rate was reduced due to the company she works for cutting staff wage rates. Sarah decided to reduce her weekly working hours. Assume that there are 120 weekly hours available between work and leisure.Draw a diagram to show Sarah’s original and new optimal points and the impact on her welfare.After that redraw your diagram and split the total welfare impact into substitution and income effects.arrow_forward
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