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A family has a target of $1500 for the income that it needs to earn each week. Both adults in the family work at flexible jobs where they have a choice over how many hours to work. They decide that the relative number of hours the should work should be equal to the ration of their hourly wage rates. The female earns $20 and hour and the male $15. How many hours does each of them work? What happens when the female gets a 20% wage rise to $24 an hour? What happen if both adults get a 20% pay rise? what does this imply about their income and substitution effects?
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Respond in complete sentences, using your own words. Be sure to use all 10 vocabulary words. Define each of the below terms in such a way as to clearly show your understanding of the terms.
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