Higher Wage

Antonio and Arlene are a married couple. Assume Arlene devotes all of her time to the labor market. Antonio divides his time between working in the labor market and taking care of things around the house. Does this mean that Arlene has a higher wage? If not, show why not.

Indifference curves for consumption and leisure

Imagine a truck driver that has complete control over his daily work schedule. He has no alternative income (from any source). Out of biologically necessity, he must sleep eight hours a day. Other than that, he can spend the rest of his time driving. If he drives all of his available time, he can afford to consume $192 worth of goods from that day's work. a) Draw his budget line. assuming he is paid by the hour (and not the mile), what is his hourly wage? b) Assuming he chooses to drive 10 hours a day, how many hours of leisure and how much consumption does this imply? c) Draw an indifference curve that is tangent to the bundle of leisure and consumption described in (b). What ... click for more

Labor Economics

A child of a wealthy family is deciding whether to work or not work and mooch off her parents. Imagine that she is offered a job that pays her $50/hour. a) Assume she receives a weekly stipend from her parents worth $1000. use an indifference map and budget line to depict a situation where she does not work. show the reservation wage on the graph. b) If her parents took the stipend away, would her decision change? show on the graph. c) On a new graph (using the same assumptions in (b)), what would happen to her hours of work if the job instead paid $100/hour? Clearly label the income and substitution effects. d) On a new graph, (using the same assumptions in (b)), what would hap... click for more

Labor Economics

One argument for the decreased labor force participation of older men (especially in the 55-64 age group) is the high generosity of post-retirement health benefits. Assume that the cost of health insurance is fixed during one's retirement years and this is completely covered by a retiree's former employer. Show how this might increase the chance that the worker would retire earlier as compared with the situation where the employee had to pay for his own health insurance.

labor econ

consider a firm where production depends on two inputs: labor and capital, with prices w and r, respectively. Initially, the firm faces market prices of w=6 and r=4. these prices then shift to w=4 and r=2. a) in which direction with the substitution effect change the firm's employment and capital stock? b) in which direction will the scale effect change the firm's employment and capital stock? c) can we say conclusively whether the firm will use more or less labor? more or less capital?