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

Case analysis instructionsnoteyou will need to get approval


Assignmentplease answer all questions completely using your

Assignment Please answer all questions completely using your own words 1. Describe the essential difference between an industry analysis and a market analysis. In what section of an ad plan are they typically included? W ...

Answer all the questionsq1 assume that the home h and

Answer all the questions: Q1. Assume that the home (H) and foreign (F) countries produce two goods apples (A) and bananas (B) by using labor. The unit labor requirements in A and B are given in two countries as follows: ...

Suppose the consumerworker values two things a consumption

Suppose the consumer/worker values two things: a consumption good C and leisure L. Suppose that there are 24 hours in a day and the consumer/worker has a utility function U (C, L) = C^0.5 + L ^0.5 The price of consumptio ...

Problemdescribe some interaction your company has with

Problem Describe some interaction your company has with another entity (firms producing complementary or substitute products, upstream suppliers, or down-stream customers), or between internal divisions within your firm ...

Assignmentconcepts you should knowa knowledge economyb

Assignment Concepts you should know: a. Knowledge economy b. Learning organisations c. Explicit and tacit knowledge d. Single-loop versus double-loop learning e. Pragmatism Discussion Questions: a. "Organization charts a ...

Cost-benefit analysisi measuring benefits from projects

Cost-Benefit Analysis I. Measuring Benefits From Projects That Reduce Private Good Costs Of Production (No distortions.)The inverse demand function for a good is given by: P = 30 -Q/3. Assume that the initial supply curv ...

Organization theorythis is the take-home midterm

ORGANIZATION THEORY This is the take-home Midterm Examination. You can use all available information, but are not allowed any exchange of Information between students taking this course. The deadline of HARD COPY submiss ...

Assignmentutilizing tools such as google scholar and scirus

Assignment Utilizing tools such as Google Scholar and Scirus locate the following: • An article advocating centralized management of the IT function; • An article advocating user-dominated management of IT. Discuss your ...

Supply and demand draw curvea define economicsb what do we

Supply and Demand Draw Curve A: Define Economics B: What do we mean by "Scarcity" and how does that relate to the concept of "Opportunity Cost"? C: Distinguish between :macroeconomics" and :microeconomics" D: Distinguish ...

  • 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

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate