Exercise 5 You are willing to work up to 80 hours a week. You make $10(B...

 

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Exercise 5 You are willing to work up to 80 hours a week. You make $10(B + 1) an hour, where B is the second-to-last digit of your Student ID#. 1. Define and graph your budget set in terms of leisure (equal to non-worked hours) as good 1 and money spent on every other good as good 2. 2. Assume that above 40 hours per week you get an overtime hourly rate of $16(B+1) per hour. Define and graph the new budget set. 3. Assume that in addition to the over-time rate you also have $200(B+1) in your checking account. Define and graph the new budget set. 2 Exercise 5.5* (from unanswered class questions): A consumer has $m that it can use to buy food (good 1) and non-food (good 2). The price of food is p₁ and the price of non-food is p2. The government has instituted a food stamps program that grants the consumer $s in food stamp money, where s <m. The consumer can only use this food stamp money to purchase food and it must do so under the following constraint: Up to 50% of food expenditures can be paid by using food stamp money. 1. Determine analytically (using equations) the budget set of this consumer. 2. Graph the budget set to show which bundles are affordable for this consumer and which are not. 3. Why is the condition s <m relevant? Exercise 5 You are willing to work up to 80 hours a week. You make $10(B + 1) an hour, where B is the second-to-last digit of your Student ID#. 1. Define and graph your budget set in terms of leisure (equal to non-worked hours) as good 1 and money spent on every other good as good 2. 2. Assume that above 40 hours per week you get an overtime hourly rate of $16(B+1) per hour. Define and graph the new budget set. 3. Assume that in addition to the over-time rate you also have $200(B+1) in your checking account. Define and graph the new budget set. 2 Exercise 5.5* (from unanswered class questions): A consumer has $m that it can use to buy food (good 1) and non-food (good 2). The price of food is p₁ and the price of non-food is p2. The government has instituted a food stamps program that grants the consumer $s in food stamp money, where s <m. The consumer can only use this food stamp money to purchase food and it must do so under the following constraint: Up to 50% of food expenditures can be paid by using food stamp money. 1. Determine analytically (using equations) the budget set of this consumer. 2. Graph the budget set to show which bundles are affordable for this consumer and which are not. 3. Why is the condition s <m relevant?

Answer rating: 100% (QA)

Answer 1 Let the leisure nonworked hours be good 1 and money spent on every other good be good 2 The total hours available are 80 hours per week Let the price of good 1 be 1 and the price of good 2 be ... View the full answer