Consider two workers with identical preferences

Assignment Help Business Economics
Reference no: EM13834252

Consider two workers with identical preferences. Phil and Bill. Both workers have the same life cycle wage path in that they face the same wage at every age, and they know what their future wages will be. Leisure and consumption are both normal goods.

a. Compare the life cycle path of hours of work between the two workers if Bill receives a one-time, unexpected inheritance at the age of 35.

b. Compare the life cycle path of hours of work between the two workers if Bill had always known he would receive (and, in fact, does receive) a one-time inheritance at the age of 35

Reference no: EM13834252

Questions Cloud

Determine the average rate of ascent : The first successful ascent to the summit of K2, the world's second highest and most dangerous mountain was July 31, 1954. The distance (in meters) the climbers ascended K2 is modeled by the graph below. Determine the average rate of ascent from p..
Calculate the equilibrium quantity-equilibrium price : A local market for new wood pallets has daily demand described by P=178-0.2Q and supply described by P=85+0.1Q. Calculate the equilibrium quantity. Suppose a market has a supply described by P=3.0+0.1Q and a demand described by P=6.0-0.2Q. Calculate ..
Labor supply equation : Suppose you want to estimate the following labor supply equation: You gather data on US workers aged 22 to 55 from the Current Population Survey. You define the Average Hourly Wage as self-reported total annual labor income divided by self-reported t..
Including a standard budget constraint for comparison : Let’s compare the incentives generated by two different types of public programs. The Aid to Families with Dependent Children (AFDC welfare before reform) provides an income subsidy, G, at 0 hours of work, it is taxed away at a rate t when an individ..
Consider two workers with identical preferences : Consider two workers with identical preferences. Phil and Bill. Both workers have the same life cycle wage path in that they face the same wage at every age, and they know what their future wages will be. Leisure and consumption are both normal goods..
Consistent with the goal of increasing productivity : Which of the following policies are consistent with the goal of increasing productivity and growth in developing countries? Check all that apply.
Graph and fully label gregs non-linear budget constraint : Greg earns $10 per hour for work for up to 30 hours of work each week. He is paid $15 dollars per hour for every hour in excess of 30. Greg faces a 15 percent tax rate and pays 3 dollars an hour in child-care expenses for each hour he works. When gra..
Non-labor income change generate a substitution effect : What happens to hours of work when non-labor income decreases? Does such a non-labor income change generate a substitution effect? Why might we expect welfare programs create work disincentives? What happens to the probability that a particular perso..

Reviews

Write a Review

 

Business Economics Questions & Answers

  Events on a banks t-account

Show each of the following events on a bank’s T-account:

  Salvage value was assumed in calculating the capital cost

K.T. Labs bought a Gene gun for $25,000. The accounting department has estimated that the machine would have an annualized capital cost of $3,880 over its 10-year service life. What salvage value was assumed in calculating the capital cost? The firm'..

  All investment must be financed with consumer saving

Suppose that every additional 3 percentage points in the investment (I / GDP) booat GDP growth by 1 percentage point. Assume also that all investment must be financed with consumer saving. The economy is now characterized by

  Residential rental property

A residential rental property is acquired during the first month of the taxable year, at a total cost (including transaction costs) of $1,200,000.

  Monopolists marginal cost is constant

A pharmaceutical firm has a monopoly on a new class of vasodilator. The market demand is given by P=240-0.01*Q, and thus MR=240-0.02*Q. The monopolist's marginal cost is constant and equal to 20. Calculate the profit-maximizing price.

  Find the real interest rate for these plans

The Shut-Kan-Do Sheet Metal Company is trying to decide whether it should pay now or pay later for upgrading its production facilities. If the company selected plan A for Action, the necessary equipment would be purchased now for $20,000. Find the re..

  Importance of the M-Pesa to the rising economic growth

Given the importance of the M-Pesa to the rising economic growth of the Kenyan economy, why would Kenyan government take 10% tax off the employees pay check?

  Social security and unemployment compensation

Explain whether transfer payments, such as Social Security and unemployment compensation, are counted as government spending in calculating GDP.

  Machine has a current salvage value

A machine has a current salvage value of $10,000, which will drop by $2,000 per year. The maintenance costs will be $1,250 per year. What is the marginal cost to extend the service for 1 year, at 8%?

  Required overall average federal tax rate

If citizens were to decide that in the long run, federal expenditures should be 28 percent of national income, what must be the required overall average federal tax rate? (Please answer this in as much detail as possible, I am having a really hard ti..

  Illustrate what risks do you face upon inquiry at your bank

Illustrate what risks do you face. Upon inquiry at your bank, you find that the forward price for a September contract to buy dollars is 10SKr per dollar. How might you hedge your exchange-rate risk for the first year.

  Maintenance costs included in lease payment

VML Industries has need of specialized yarn manufacturing equipment for operations over the next 3 years. The firm could buy the machinery for $95,000 and depreciate it using MACRS (this is a 7-year property). Annual maintenance would be $7500, and i..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd