Question One Emily is a career-working woman. She considers 8 hours of sleep vital for health and the rest time available for work and leisure. Emily's job pays $30 per hour. She is willing to work 8 hours daily from Monday to Friday. Emily owns a rental property and collects $400 of rental income weekly. a) Construct a diagram to show Emily's labour market circumstances in numbers including her maximum and optimal income. (4 Marks)b) Emily's boyfriend, Eric, is in the process of changing careers and temporarily has no income. To support Eric, Emily invites Eric to move in with her. Emily finances their household expenses and finds this decision equivalent to a 50% "tax" on her wage income. With this change, Emily adjusts her work hours to 50 per week and feels "Life is worse off". Add all the numerical information in Part b) into the graph drawn in Part a). (4 Marks)1) Observe Emily's situations before and after living with Eric. In the graph, decompose Emily's labour market experiences into substitution effect, income effect, and total effect. Clearly label their magnitudes and directions. (4 Marks)d) With great effort, Eric finds a job! His weekly wage income is $1400. Illustrate how Eric'semployment affects Emily's work decisions and economic well-being if they continue to live as a household. (3 Marks)Question Two Susan has a $5000 annual non-labour income. Her total available time is 4160 hours per year. Susan's wage rate is $15 per hour, and she chooses to work 2000 hours a year. Suppose when Susan's wage rate increases from $15 to $18 per hour, she will work 2040 hours. At $18 per hour, if she works 2200 hours per year, she would be indifferent to her original work decision before the wage increase. a) Draw a diagram to show all the given information about Susan. Calculate and label all the relevant income levels. (7 Marks)b) Calculate and illustrate Susan's substitution effect, income effect, and total effect. (5 Marks)

Question One Emily 1s a career-working woman. She considers 8 hours of sleep vital for health and the rest time available for work and leisure. Emily's job pays $30 per hour. She is willing to work 8 hours daily from Monday to Friday. Emily owns a rental property and collects $400 of rental income weekly. a) Construct a diagram to show Emily's labour market circumstances in numbers including her maximum and optimal income. (4 Marks) b) Emily's boyfriend, Eric, is in the process of changing careers and temporarily has no income. To support Eric, Emily invites Eric to move in with her. Emily finances their household expenses and finds this decision equivalent to a 50% \"tax\" on her wage income. With this change, Emily adjusts her work hours to 50 per week and feels \"Life is worse off\". Add all the numerical information in Part b) into the graph drawn in Part a). (4 Marks) ) Observe Emily's situations before and after living with Eric. In the graph, decompose Emily's labour market experiences into substitution effect, income effect, and total effect. Clearly label their magnitudes and directions. (4 Marks) d) With great effort, Eric finds a job! His weekly wage income is $1400. Illustrate how Eric's employment affects Emily's work decisions and economic well-being if they continue to live as a household. (3 Marks) Question Two Susan has a $5000 annual non-labour income. Her total available time is 4160 hours per year. Susan's wage rate is $15 per hour, and she chooses to work 2000 hours a year. Suppose when Susan's wage rate increases from $15 to $18 per hour, she will work 2040 hours. At $18 per hour, if she works 2200 hours per year, she would be indifferent to her original work decision before the wage increase. a) Draw a diagram to show all the given information about Susan. Calculate and label all the relevant income levels. (7 Marks) b) Calculate and illustrate Susan's substitution effect, income effect, and total effect