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[solution] » ( Substitution and Income Effects ) Suppose that the cost of living increases, thereb


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  1. (Substitution and Income Effects) Suppose that the cost of living increases, thereby reducing the purchasing power of your income. If your money wage doesn?t increase, you may work more hours because of this cost-of-living increase. Is this response predominantly an income effect or a substitution effect? Explain.

  1. (Market Supply of Labor) The following table shows the number of hours per week supplied to a particular market by three individuals at various wage rates. Calculate the total hours per week (QT) supplied to the market.

Hourly Wage ($)

Hours per week

Q1

Q2

Q3

Qt

15

20

0

0

16

25

0

0

17

35

10

0

18

45

25

10

19

12

40

30

20

38

37

45

Which individuals, if any, have backward-bending supply curves in the wage range shown? Does the market supply curve bend backward in the wage range shown in the table?

  1. (Unionization Rates) What trends have worked against the union movement during the last half century? What has happened to the effectiveness of strikes and why?
  2. (Substitution and Income Effects) Suppose that the cost of living increases, thereby reducing the purchasing power of your income. If your money wage doesn?t increase, you may work more hours because of this cost-of-living increase. Is this response predominantly an income effect or a substitution effect? Explain.

  1. (Market Supply of Labor) The following table shows the number of hours per week supplied to a particular market by three individuals at various wage rates. Calculate the total hours per week (QT) supplied to the market.

Hourly Wage ($)

Hours per week

Q1

Q2

Q3

Qt

15

20

0

0

16

25

0

0

17

35

10

0

18

45

25

10

19

12

40

30

20

38

37

45

Which individuals, if any, have backward-bending supply curves in the wage range shown? Does the market supply curve bend backward in the wage range shown in the table?

  1. (Unionization Rates) What trends have worked against the union movement during the last half century? What has happened to the effectiveness of strikes and why?

 


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Solution #00020213

[solution] » ( Substitution and Income Effects ) Suppose that the cost of living increases, thereb.zip

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