1.Which of the following is correct regarding the elasticity of labor demand

a.If the product is elastic, the derived demand for labour will be inelastic

b.If the share of labour costs in total costs is large, the derived demand for labour will be inelastic

c.If capital and labour are easily substitutable, the derived demand for labour will be inelastic

d.If the supply of substitutes inputs is inelastic, the derived demand for labour will be inelastic

2.Suppose a government offers two income support programs to choose form

1)SA that pays: SA=200 - w*h where SA > = 0

2)IS that pays: IS = 0.25*(450 - w*h) if h > 30 where IS > = 0

SA is a welfare program and IS pays a supplement if the person works at least 30 hours. Also, there is no stigma with either program is chosen by someone who is currently working a few hours at w= $5

3.Which statement is incorrect about commute time to/from work

a.It increases the reservation wage

b.It shifts the budget constraint to the left

c.It affects the shape on the indifference curve, and decreases the willingness to work part time

d.It creates a discontinuity in the budget constraint