compare the marginal rates of substitution, Financial Accounting

Consider two individuals with endowments of 60 hours per week of leisure, nonlabour income of $Y per week, and a wage of $7.50.  At this wage assume that workers are constrained by their employers to work exactly 40 hours per week or not at all.

a.   On separate diagrams, show the equilibrium of a worker (A) for whom 40 hours is the optimum labour supply, and a worker (B) who would prefer to work 20 hours per week, but still prefers the 40 hour week to not working at all.  Compare the marginal rates of substitution for these individuals at 40 hours per week.

b.   Show that the employer can make both itself and worker B better off by instituting lower wages for part time workers and letting them work less (assuming that the firm can hire more part time workers at that lower wage).

 

 

 

 

Posted Date: 3/20/2013 4:21:14 AM | Location : United States







Related Discussions:- compare the marginal rates of substitution, Assignment Help, Ask Question on compare the marginal rates of substitution, Get Answer, Expert's Help, compare the marginal rates of substitution Discussions

Write discussion on compare the marginal rates of substitution
Your posts are moderated
Related Questions
discuss the content of financial statement with reference to Indian companies?

Business start up accounting transactions: Jane Whitfield, a sole proprietor, established the JW Flower Shop on January 2, 2010. The following transactions have occurred during

Powers of trustee (A) Of his own initiative, he may: 1.    Sell and transfer any part of the bankrupt's property; 2.    Gives receipts for money received; 3.    Take all n

Suppose that the average firm in your company's industry is expected to grow at a constant rate of 4% and that its dividend yield is 8%. Your company is about as risky as the avera

what is the formulae for calculating Net income?

A huge number of financial ratios are in utilized. They complete a broad variety of functions and objectives. Managers estimate performance and investors match their expectations,

How many full-time members are on the Public Company Accounting Oversight Board (PCAOB)?

Equation illustrates the relationship in between PVA n , A, K and n. So manipulating this a bit: We find that A = PVA n [(k (1 + k) n )/((1 +k) n - 1)] [(k (1 + k) n )/(

The following information was taken from the ledger of Jefferson Industries, Inc.: Direct labor $85,000 Administrative expenses $59,0

Suppose that the one-period rate is 4%. Explain why a two-period rate of 6% cannot be an equilibrium when individuals expect the one-period rate to remain constant.