Humanity is faced with a tough choice, work or leisure. Within the theory of consumer behaviour, apply the labour- leisure choice model to explain what happens when there are two (2) consecutive increases in the wage rate of a an individual and use that to derive the individual's 1. labour supply curve 2. demand for leisure curve

Humanity is faced with a tough choice, work or leisure. Within the theory of consumer behaviour, apply the labour- leisure choice model to explain what happens when there are two (2) consecutive increases in the wage rate of a an individual and use that to derive the individual's 1. labour supply curve 2. demand for leisure curve

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter30: The Labor Market

Section: Chapter Questions

Problem 14E

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Humanity is faced with a tough choice, work or leisure. Within the theory of consumer behaviour, apply the labour-leisure choice model to explain what happens when there are two (2) consecutive increases in the wage rate of a an individual and use that to derive the individual's 1.labour supply curve 2.demand for leisure curve
what happens in the work-leisure model, when the wage rate is decreasing and income effect is stronger than substitution effect?
Then consider an individual with the exact same preferences (same indifference curve map as in the previous question) and skills, but this person happened to have a better connection with a company and is earning a higher wage than the individual in part 'a'. Thus, this person faces budget line BL' below and takes l'hours of leisure (works T - l'hours). C 50 BL l' O Keep leisure the same T Then this individual is offered the same take-it-or-leave-it (TIOLI) cash grant of $g (that must be forgone if this person works at all). What would this individual do (in terms of leisure taken (and labor supplied))? O Take no leisure 151515 O Take more leisure, but not as much at T. ولا O Take all leisure (not work at all) O None of the other options.
Why does a worker allocate his or her time over the life cycle so as to work more hours in those periods when the wage is highest? Why does the worker not experience an income effect during those periods?
Define the income-leisure trade-off that makes up the labor supply functionand the intuition for the upward sloping labor supply curve. What two effectsare involved in this trade-off? Explain.
The lines on the graph are budget constraints, showing the tradeoff between labor and leisure. Suppose that when the wage changes, an individual chooses to move from point A to another point on the graph. For each of the other points, where would it belong on the backward bending labor supply curve? Backward‑bendingportionVerticalportionUpward‑slopingportion Answer Bank B D F C E
The backward bending individual labour supply curve indicates that: 1. the income effect dominates the substitution effect in the upward sloping portion of the curve. II. the substitution effect dominates the income effect in the upward sloping portion of the curve. III. the substitution effect dominates the income effect in the downward sloping portion of the curve. A. Only III is correct B. I and III are correct O C. Only I is correct
Education is related to income, in general. O True O False
What is meant by returns to factor? State 3 phrases of the law of variable proportion.
Ann has non-labour income M; hourly wage rate w. She can choose how many hours she works. She can use her income to purchase consumption, each unit of consumption has price p. (a) Initially, Ann decides not to work at all. Using a consumption-leisure diagram, explain her behaviour. (b) Now, her hourly wage rate increases to w’ > w. She decides to start working. Using an appropriate diagram, explain how she decides how many hours to work using substitution and income effects.
a) Overall effect on labour choice is the summation of income and substitution effect. Please explain these effect by drawing a graph. b) Why industrial revolution started in Britain and what are the basic consenquences of the industrial revolution forthe World? c)What are the three main economic institutions of capitalism? Please explain the relation among them.
Explain how the wage can adjust to balance thesupply and demand for labor while simultaneouslyequaling the value of the marginal product oflabor.