Assuming that the market wage is equal to 15 dollars per hour, derive the equati
ID: 1142255 • Letter: A
Question
Assuming that the market wage is equal to 15 dollars per hour, derive the equation of the budget constraint.
_____________
2)
When the price of labor falls, the quantity of ________ demanded will ________, but the effect on ________ is ambiguous.
labor; increase; capital
labor; decrease; capital
capital; increase; labor
capital; decrease; labor
3)
The above picture describes an increase in wage which generates income and substitution effect.
The above picture describes an increase in wage which generates substitution effect.
The above picture describes an increase in non-labor income which generates income and substitution effect.
The above picture describes an increase in non-labor income which generates income.
a.labor; increase; capital
b.labor; decrease; capital
c.capital; increase; labor
d.capital; decrease; labor
3)
Consumption 500 Hours 0 70 110 LeisureExplanation / Answer
1)When market wage rate is 15, total income=15*110=1650
Thus equation of budget line is F+15L=1650
2)when price of labour falls, the quantity of labor demanded will increase but the effect on capital is ambiguous
3)ans is d The above picture denotes non labor income which generates income.