Ask Question, Ask an Expert


Ask Microeconomics Expert

problem 1: Consider an individual facing a wage rate w. There is a total of 100 hrs available for work or leisure in a week.

a) Represent his budget constraint graphically.
b) Represent the effect of a reduction in the wage rate.
c) Represent the effect of a proportional tax on the labor income.
d) Assume that the individual should pay a 10$ per week in taxes, regardless of how much he works. How does this influence his budget constraint?

problem 2: Assume that the wage rate is w = 1. An agent is working 6 hrs per day and consumes 5 units of goods per day. Assume that the agent claims to be indifferent between his current situation and working one more hour in exchange for two additional units of consumption. Is this agent maximizing is utility? Why? Should he be working more hours? Or fewer?

problem 3: Draw an indifference curve for the consumption and hours of work.

problem 4: Assume, as in the federal income tax code for the United States, that the representative consumer faces a wage income tax with a standard deduction. That is the representative consumer pays no tax on wage income for the first x units of real wage income, and then pays a proportional tax t on each unit of real wage income greater than x.

Thus, the consumer’s budget constraint is given by c = w(h - 1 + (Pie) if w(h - 1) ≤ x, or c = (1-t) w(h-1) + tx +(pie) if w(h-1) ≥ x. Now, assume that the government decreases the tax deduction x. By using diagrams, find out the effects of this tax change on the consumer and elucidate your results in terms of income and substitution effects. Make sure that you consider two cases. In the first case the consumer doesn’t pay any tax before is x reduced, and in the second case the consumer pays a positive tax before x is reduced.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91767

Have any Question? 

Related Questions in Microeconomics

1 the crr model european claimconsider the crr model of

1. The CRR model: European claim. Consider the CRR model of stock price S with T periods and parameters d (a) Consider the European claim X with expiry date T and the payoff X = g(S r ) = 1/S T 1[k,∞)(S T ). Show that th ...

Short paperthus far in the course the primary focus has

Short Paper Thus far in the course, the primary focus has been on hospitals within the healthcare industry. For this short paper you will consider the economic issues related to long-term care facilities. In this assignm ...

Problem -the table below gives the income of each of four

Problem - The Table below gives the income of each of four individuals who are in a region. Calculate and plot the Lorenz curve and calculate the Gini coefficient for this economy. individual income 1 100 2 200 3 300 4 4 ...

Intermediate microeconomics assignmentexercise 1 -

INTERMEDIATE MICROECONOMICS ASSIGNMENT Exercise 1 - Capturing surplus using a block pricing Consider a monopolist facing a linear demand p(q) = 20 - q, and marginal cost MC = 2. a) If the monopolist charges the same pric ...

Assignment1laura just opened a coffee shop in nyc named

Assignment 1. Laura just opened a coffee shop in NYC named Squirrel Coffee. Hoping to cater to the hipsters, she sells a special kind of cold brew infused with nitrogen, which she dubs ‘nitro coffee'. Assume for the purp ...

Implicit and explicit costs economic problemsproblem achoco

Implicit and Explicit Costs: Economic Problems Problem A Choco Delite is a manufacturer of fine chocolates. Its monthly rental expense is $1,000,000. It also has $2 million in fixed labor costs. Its marginal costs are $. ...

Assignmentscenario summarya kansas city based supplier of

Assignment Scenario Summary A Kansas City based supplier of health care information technology (HCIT) solutions has recently hired you as a Human Resource Manager. You are in charge of hiring new medical consultants for ...

Assignmentthe agile approach towards system analysis and

Assignment The agile approach towards system analysis and development emphasizes iterative and incremental development, in which requirements and solutions evolve through collaboration. Prepare a 1000 word essay on the r ...

Task list principles of microeconomicsyou are starting

Task List: : Principles of Microeconomics You are starting your own Internet business. You decide to form a company that will sell cookbooks online. is scheduled to launch 6 months from today. You estim ...

The economy is full employment now the government wants to

The economy is full employment. Now the government wants to change the composition of demand toward investment and away from consumption without, however, allowing aggregate demand to beyond full employment. What is requ ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen