Imply about the shape of indifference curves

Assignment Help Business Economics
Reference no: EM131002264

Peggy is a single mother who currently does not work and has a two year-old child named Bud. Peggy’s concerned parents give her $30/day (non-labor income) to support her and Bud. Peggy has just interviewed for a job as a cashier at Whole Food’s grocery store. They are willing to hire her at a wage of $8/hour. If Peggy takes the job, she will have to pay $20/day for childcare while she is at work. This question concerns Peggy’s decision on whether to take the job.

A) Suppose that Peggy can work at most 12 hours in a day and that if Peggy works even one hour she has to pay the $20 in childcare for Bud. Draw Peggy’s effective budget constraint if she took the Whole Food’s job at $8/hour. Now draw her indifference curve through her chosen point of not working which is consistent with what her preferences must be given that she chooses not to work at the current offered wage.

B) For the indifference curve you have drawn, show graphically Peggy’s reservation wage. Would she be more likely or less likely to take the job if her indifference curve was flatter than the one you have drawn? What does a flatter indifference curve imply about Peggy’s relative marginal utility of leisure? Suppose Whole Food’s decides to offer free child care on the premises but did not change the wage they offered Peggy. Draw Peggy’s new budget constraint. Is she more or less likely to take the job now?

C) Suppose Marge, Peggy’s friend, was willing to work for Whole Food’s at $7/hour. What might this imply about the shape of Marge’s indifference curves (i.e., her tastes) relative to Peggy’s? Is this necessarily the case? Explain

Reference no: EM131002264

Questions Cloud

Assume that cash flows occur continuously throughout year : If a project costs $100,000 and is expected to return $25,000 annually, how long does it take to recover the initial investment? What would be the discounted payback period at i=15%? Assume that the cash flows occur continuously throughout the year.
What about a risk-seeking individual : If the investment described in Exercise 12 is an individual’s possible weekly compensation and the individual has no control over the outcome, what effort will a risk-averse individual put in? What about a risk-seeking individual?
What is the specific citation that describes the guidelines : What is the specific citation that describes the guidelines for presenting accumulated other comprehensive income on the statement of shareholders' equity?
Consumption bundle on budget line that maximize satisfaction : Hulk goes to the gym 20 times a month. His income is $1000 per month and his visits to the gym cost $4 per visit. For simplicity, assume all other goods that Hulk consumes besides the gym costs $10 each. Assume Hulk exhibits diminishing marginal rate..
Imply about the shape of indifference curves : Peggy is a single mother who currently does not work and has a two year-old child named Bud. Peggy’s concerned parents give her $30/day (non-labor income) to support her and Bud. Peggy has just interviewed for a job as a cashier at Whole Food’s groce..
Essay that defines cheating in the classroom : In order to better understand cheating and how to avoid cheating in the future, I will research cheating on the internet.  ; I will write a 4-5 page essay that defines cheating in the classroom, gives examples of different ways one might cheat
Indicate by letter whether each of the items listed below : Indicate by letter whether each of the items listed below most likely is reported in the income statement as Net Income (NI) or in the statement of comprehensive income as Other Comprehensive Income (OCI).
Provide some analysis of policies that address breast cancer : The following table contains statements that provide some analysis of policies that address breast cancer.

Reviews

Write a Review

Business Economics Questions & Answers

  Economics assignment

This document contains various important questions and their appropriate answers in the subject field of Economics.

  Demand and supply curves

Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.

  Long-run perfectly competitive equilibrium for the firm

Evaluate Government intervene and correct this situation?(a) Explain the concept of a concentration ratio. A rise in the price of magarine Explain the impact of external costs and external benefits on resource allocation long-run perfectly c..

  Supply and demand diagrams

Explain each of the following using supply and demand diagrams,  With the use of a graph, explain how these two programs affect cigarette consumption and the price of cigarettes.

  Case study: fisher-price toys

The case study of the Fisher-Price Toys, Inc., a popular case in basic economics and management from the prestigious Harvard Business School.

  Draw the production possibility curve

Draw the production possibility curve and a. Define consumer surplus and producer surplus.

  Tax revenue

The Australian government administers two programs that affect the market for cigarettes

  Maximize total welfare

How many tickets to sell to maximize total welfare.

  Difference between the cv and the ev

The change in consumer surplus (?CS) is not "theoretically" justifiable like the CV and EV but it continues to be the most widely used measure of consumer welfare change. Explain how this can be reconciled

  Depict von neumann-morgenstern utility index u in a diagram

Depict the von Neumann-Morgenstern utility index u in a diagram

  What is the market solution

What is the market solution (market price and quantity) and What is the total surplus of the society under the market solution

  Calculate gross national product and net national product

Calculate gross national product and net national product

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