Econ 1V Problem Set 4 (Due 18:00 PST on 4/30) Submission Options: (a) Write your answers and draw your graphs in this document, convert it to a PDF file, and upload the converted document to Canvas under assignments. (b) Print this document, handwrite your answers, scan the document as a PDF, and upload it to Canvas under assignments. Please include all text and figures in a SINGLE file. Do not upload multiple files. Late homework will not be accepted. You are welcome to discuss problem-solving strategies with your classmates who are currently enrolled in Econ 1V, but you must write up your own answers. Identical or near identical answers are not acceptable. For full credit, please show all of your work and label all figures/graphs. 1. Recently, demand has increased for corn-based ethanol to substitute for gasoline in the United States. How will this affect the marginal product, marginal revenue product, and wages of farm workers on corn farms? 2. Analyze the labor supply schedules for Joshua and Scott below. Wage Hours Worked by Scott Hours Worked by Joshua $5 5 0 $8 10 8 $12 20 15 $15 30 25 $18 40 35 $20 45 33 $25 50 30 a) Draw the labor supply schedules for Joshua and Scott. Assume that they can work for any fraction of the hour. b) How does Scott's marginal benefit from more leisure compare with Joshua's? c) At what point does the income effect begin to outweigh the substitution effect for Joshua? Briefly explain. 3. The following table shows the marginal benefit per year (in dollars) to all the households in a small community from city parks. The table also shows the marginal cost per year (in dollars) of constructing and maintaining new parks. Number of Parks Marginal benefit to Household A Marginal Benefit to Household B Marginal Cost of Building a Park 1 300 250 1,000 2 100 150 3,000 3 40 30 5,000 4 20 20 7,000 5 5 10 9,000 a) Are city parks a public good in the economic sense of the term? Why or why not? Explain briefly. b) If the town consists of 10 households of type A and 15 households of type B, plot the marginal benefit for the whole town and the marginal cost in the same graph, placing the number of city parks on the horizontal axis. c) What is the socially optimal number of parks for the town? Illustrate your answer using the graph in part (b)