5. Suppose workers may supply labor hours h at wage w. Their earned income will therefore...
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5. Suppose workers may supply labor hours h at wage w. Their earned income will therefore be wh. They may also receive some government transfers G, and have non-labor income R. They buy consumptions c with their income at price 1. Their budget line will therefore be c wh+G+R Suppose worker's utility is U (c, L) = c - ho+1 0 +1 (a) Suppose there are no transfers, and no non-labor income, R = G= 0. Solve for this worker's labor supply curve, and sketch their optimal choice of consumption and labor. 10 points. (b) What is the own-price elasticity of this worker's labor supply? 5 points. Suppose instead that Worker utility is given by u(c, h) = c-a 1-a - h (c) Suppose there are no transfers, and no non-labor income, R = G = 0. Solve for this worker's labor supply curve, and sketch their optimal choice of consumption and labor. 10 points. (d) What is the own-price elasticity of this worker's labor supply? 5 points. (e) Explain how the first and second utility function in this problem are relatied. 5 points. (f) Suppose a flat tax on labor income is imposed on this worker: calculate their new, after-tax labor supply curve. Depict graphi- cally the effect of this tax on the labor supply curve. 5 points. 5. Suppose workers may supply labor hours h at wage w. Their earned income will therefore be wh. They may also receive some government transfers G, and have non-labor income R. They buy consumptions c with their income at price 1. Their budget line will therefore be c wh+G+R Suppose worker's utility is U (c, L) = c - ho+1 0 +1 (a) Suppose there are no transfers, and no non-labor income, R = G= 0. Solve for this worker's labor supply curve, and sketch their optimal choice of consumption and labor. 10 points. (b) What is the own-price elasticity of this worker's labor supply? 5 points. Suppose instead that Worker utility is given by u(c, h) = c-a 1-a - h (c) Suppose there are no transfers, and no non-labor income, R = G = 0. Solve for this worker's labor supply curve, and sketch their optimal choice of consumption and labor. 10 points. (d) What is the own-price elasticity of this worker's labor supply? 5 points. (e) Explain how the first and second utility function in this problem are relatied. 5 points. (f) Suppose a flat tax on labor income is imposed on this worker: calculate their new, after-tax labor supply curve. Depict graphi- cally the effect of this tax on the labor supply curve. 5 points.
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International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr
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