1) In period t, a parental household equipped with human capital ht earns a labour income of wht, where w> 0 represents the constant wage rate. This household derives utility out of own consumption (ct), the number of children nt and their level of human capital ht+1. Education is provided by teachers who are equipped with the economy's average level of human capital ht. Human capital per child evolves from one period to another according to

1) In period t, a parental household equipped with human capital ht earns a labour income of wht, where w> 0 represents the constant wage rate. This household derives utility out of own consumption (ct), the number of children nt and their level of human capital ht+1. Education is provided by teachers who are equipped with the economy's average level of human capital ht. Human capital per child evolves from one period to another according to

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter16: Labor Markets

Section: Chapter Questions

Problem 16.10P

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Consider a parent, with $200 in nonlabor income per week, who can earn $10per hour working between 0 and 60 hours per week. If this parent decides to work at allthen high-quality day care will cost a fixed $100 per week. a) Draw the budget line for this parent.
In period t, a parental household (indexed by i) equipped with human capital hit earns a labour income of wh^i_t, where w > 0 represents a constant wage rate. This household derives utility out of own consumption c^i_t, the number of children nit and their level of human capital h^i_(t+1). Education is provided by teachers who are equipped with the economy’s average level of human capital h^T_t . Human capital per child evolves from one period to another according to h^i_(t+1) =(e^i_t +e ̄)^η(h^i_t)^τ(h^T_t )^(1−τ), 0 < η, τ < 1 (1) where e ̄ > 0 is a constant parameter and e^i_t represents the level of education per child.The households’ utility function is specified as U_t^i = ln(c^i_t) + γ[ln(n^i_t) + βln(h^i_(t+1))] (2) with γ,β > 0.Raising one child to adulthood requires a share of 0 < z < 1 units of time. Moreover, education is subsidised at a rate 0 ≤ s_e < 1, such that education costs per child amount to wh^T_t e^i_t(1 − s_e). Let’s define a…
In period t, a parental household (indexed by i) equipped with human capital hit earns a labour income of wh^i_t, where w > 0 represents a constant wage rate. This household derives utility out of own consumption c^i_t, the number of children nit and their level of human capital h^i_(t+1). Education is provided by teachers who are equipped with the economy’s average level of human capital h^T_t . Human capital per child evolves from one period to another according to h^i_(t+1) =(e^i_t +e ̄)^η(h^i_t)^τ(h^T_t )^(1−τ), 0 < η, τ < 1 (1) where e ̄ > 0 is a constant parameter and e^i_t represents the level of education per child.The households’ utility function is specified as U_t^i = ln(c^i_t) + γ[ln(n^i_t) + βln(h^i_(t+1))] (2) with γ,β > 0.Raising one child to adulthood requires a share of 0 < z < 1 units of time. Moreover, education is subsidised at a rate 0 ≤ s_e < 1, such that education costs per child amount to wh^T_t e^i_t(1 − s_e). Solve household i’s…
Explain how the wage can adjust to balance thesupply and demand for labor while simultaneouslyequaling the value of the marginal product oflabor.
1. Given the graph below, would Amy enter the LF? What is her reservation wage? MG() A 33 30 15 16 Hours of NMT 2. Suppose Amy's nonlabor income increases and shifts her budget constraint to BE'. Given the graph below, what happened to Amy's reservation wage? How would Amy's work decision change? 0 MO(S) A 30 E 16 Hours of NMT
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> Figure 1 $ of consumption per year 30000 28000 26000 24000 22000 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 Warren 333 0 0 200 400 600 sample indifference curves Refer to Figure 1 What is Warren's wage per hour? 1166 800 1000 1200 1400 1600 1800 2000 2200 Hours of leisure per year Suppose all workers have 2000 hours to spend in work or leisure. Figure 1 displays sample indifference curves and a budget constraint corresponding to no income redistribution program for Warren.
w ouseunus varI EUITE wrien purchase in factor markets. rirms factors Suppose Eleanor earns $550 per week working as a corporate attorney for Rowan and Martin Associates. She uses $10 to get her car washed at Spotless Car Wash. Spotless Car Wash pays Darnell $400 per week to wash cars. Darnell uses $375 to purchase legal service from Rowan and Martin Associates, Identify whether each of the following events in this scenario occurs in the factor market or the product market. Event Factor Market Product Market Eleanor earns $s50 per week working for Rowan and Martin Associates. Darnell spends $375 to purchase legal service from Rowan and Martin Associates, Eleanor spends $10 to gether car washed. olo
4.1 Cindy gets utility from consumption (C) and leisure (L), and has a weekly timebudget ofT= 110 hours. Her utility function isU(C, L) = C L. She receives $660 each week from her great-grandmother regardless of how much Cindy works. What is Cindy's reservation wage? 4.2What is Cindy's optimal labor supply (h) and consumption (C) if her wage is 10 dollars per hour? Show your work.4.3
Why does a worker allocate his or her time over the life cycle so as to work more hours in those periods when the wage is highest? Why does the worker not experience an income effect during those periods?
The figure depicts the efficiency wage equilibrium of a worker and a firm. According to this figure: Isocosts Worker's best response curve 0.7---- 0.5+ -- 4 6 10 12 Hourly wage, $ At B, the MRS is higher than the MRT. O The firm is able to increase its profits from those attained at A by inducing the worker to exert higher effort in return for a higher wage. O The firm would maximise its profits by paying an hourly wage that is $6 above the worker's reservation wage. O At C, the marginal rate of substitution (MRS) between higher wage cost and higher effort exceeds the marginal rate of transformation (MRT). Effort per hour 近