1. Find the most recent data on the labor force, labor force participation rate, employment-population ratio, and the unemployment rate for the U.S., Indiana, and Monroe County. State your source(s).
2. Alex's reservation wage is $12 per hour, and he has zero non-labor income. At a wage of $20, Alex will work 40 hours per week. Show Alex's equilibrium on a well-labeled diagram of the income-leisure model. Label Alex's hours of leisure, work, consumption, and wage rate.
3a. Barry earns $18 an hour and works 40 hours per week. There are 110 hours a week available for work. Barry receives $100 per week from a trust fund. Show these facts on the income-leisure model. Label Barry's hours of leisure, work, consumption, and wage rate.
b. Now suppose that Barry has the opportunity to earn $27 per hour for each hour he works above 40 hours per week. Draw the new budget line and equilibrium.
4. Among single, college educated women aged 22-25, average annual hours worked is 2160, and the average wage is $22.50. If the average wage increases to $25 per hour, average annual hours work increases to 2340. What is the elasticity of labor supply for this group of workers?
5. Read the article, "On Labor Supply ca. 1908," from the New York Times of that year. Draw Mr. Reysons' indifference curves in income-leisure space and explain their slope.
Note: you can't plot the curves precisely, but you can sketch their important characteristics.
6. Refer to the article, "Hidden Jobless Disaster," by Ed Lazear. How does the recent behavior of the unemployment rate and the employment-to-population ratio differ from their historical relationship? What reasons does Lazear cite to explain the low employment rate?
7. Draw the following budget lines. For each case, use the "standard" budget line with nonlabor income "V" and wage rate "w."
a. Government introduces a cash grant welfare program of G dollars payable to anyone, regardless of their work status.
b. Government introduces a welfare payment of G dollars for individuals who do not work. Welfare is not available to persons who work.
8. Show an individual who is indifferent between work and no work at an hourly wage of $10.79.
9. Back in the middle 1990s, the Atlanta Constitution printed a story about a middle-aged man who had won a $4 million dollar lottery - an exceptional amount for the time. The winner had been working a double shift as a garbage collector. When asked what he intended to do after winning so much money, the man replied, "I'm going to quit one of my shifts." "Only one?" asked the incredulous reporter." "A man has to have work," replied the new millionaire.
a. Draw the labor supply curve for the lottery winner above.
b. Show the change above on the income-leisure model.
c. Indicate the Income Effect and the Substitution Effect. Which dominates in this problem?