203 macro.

4a)Explain why the market for low-skilled labor is not Pareto efficient when the minimum wage is imposed.

4b)Although the minimum wage leads to an inefficient allocation of resources, society may still prefer to impose the minimum wage in the interest of equity. Explain the logic behind this statement and use a welfare possibilities frontier and social indifference curves to support your answer.

In the utility function U= 2X + Y,

Will the indifference curve be straight, concave, or convex [Hint: is there diminishing marginal utility in X or Y?]

Presume this person makes $20, & the price of X is $1 and the price of Y is $1.

How much X is purchased, if any? How much Y is purchased, if any? [Hint: recall that we are maximizing utility and plug in values from the budget constraint]

(10 Points) Describe some of the reasons why the current level of annual economic growth is not sustainable for Canada, Also, explain what is the relationship between inflation and unemployment.

The distribution of a company's last year's monthly income and total costs is shown below (in thousands.) For example, on the Revenue side, the company had incomes of $25,000 each month in five months of the year. If the random numbers generated using Monte Carlo simulation were0.75for Revenue and0.86for Total Cost, what is the expected Total Income (Revenue - Total Cost)

A strict upper limit on the number of hours that a child can work (6 points).The government enforces a maximum number of hours a child could work, L.Draw the constraint implied by this policy and analyze the impact.

The effects will differ depending on the child's initial working hours L1.Consider the case when (i )L1 L.

b) A conditional cash transfer policy. This policy will give poor households cashifthechildreninthehouseholdspentatleast H hoursinschool.Tosimplify, suppose that all home time not spent working is spent in school.Also, going to school is costless.As in (a), analyze the impact of this policy.

As in (a), the effects will differ depending on the child's initial working hours L1.Consider the case when (i) (TL1)> Hand (ii) (TL1)

(c)Summarize the impacts of the two policies above on the well-being of house-holdsandhoursofchildlabor,consideringthedifferentinitialnumberofchildlabor before the policy.Compare their impacts to the unconditional cash transfer policy.

\fWithin a small nation, there is a fixed population choosing between two locations-Goodburg and Plainville. The population consumes a numeraire good and housing. Within each area. there is free entry of firms producing the numeraire good using both land and labor. The productivity level in Goodburg is a function of Goodburg's population. The productivity level in Plainville is fixed. There is a fixed amount of land in each area which can be used to produce cither housing or the numeraire good. There is also free entry of firms producing housing, also using land and labor, and the productivity of firms in the housing sector is the same in each of the two areas. The numeraire good is traded freely on international markets and thus has a normalized market price of one. Housing, however, can only be purchased locally and its price is determined in equilibrium. Individual welfare is a function of consumption of the numeraire good, housing, and a public amenity. The amenity is produced by the public sector, where the level of the amenity is a function only of labor devoted to the public amenity divided by total population. This spending is financed by a lump sum tax on residents and potentially also a housing tax. (1 ) Assume that government spending is exogenous and funded with area-specific lump sum taxes. Characterize the competitive equilibrium. Note that the above setup provides many, but not all, of the assumptions necessary to solve the model. Be sure to specify any other assumptions you need. (2) Derive the conditions for a socially optimal spatial distribution of population. Describe a minimal set of policy interventions that will produce such an optimum. (3) Assume that localities can set tax levels using lump sum taxes. Derive the tax rates if they are trying to maximize area population and compare with the setting where they are maximizing average welfare of their citizens. (4) Assume localities are providing the local public good using local lump sum taxes to maximize population as in (3). Is it ever Pareto improving to tax housing? Explain