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I can not figure out those two questions! Suppose that Shelly receives an hourly wage (W) and non-labor income V. Given her current circumstances, she
I can not figure out those two questions!
- Suppose that Shelly receives an hourly wage (W) and non-labor income V.
- Given her current circumstances, she works exactly 40 hours per week. Show this situation on a diagram.
- Now suppose that her employer institutes an overtime wage policy that pays Shelly 1.5 times her hourly wage. Use a diagram to show that Shelly will unambiguously increase her hours of work as a result of the overtime pay.
- Suppose that Shelly's coworker, Tim, was working 50 hours per week when he received the same wage as Shelly (W). Use a diagram to show that Tim could reduce his hours of work from 50 hours if he was offered the same overtime pay received by Shelly (1.5 times his hourly wage).
- Why do Shelly's hours of work unambiguously increase, while Tim's hours of work could increase or, as shown, decrease?
2) Consider a woman who receives $100 per week in dividends. If she works, she receives $10 per hour in salary, but she also must pay $50 per week in "fixed" child-care expenses. Show that given her current situation, this woman decides not to work. Explain. Would a subsidy to cover child-care expenses increase the probability that this woman will want to work? Show and explain.
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