ECON 1014 HOMEWORK #1 Chapter 1 1.Lucas is an unemployed mechanic. He collects $250 per week in unemployment insurance, but he must actively “search” for work in order to receive the unemployment insurance. Lucas spends 4 hours per day, 5 days per week, looking for a job. One day, his Aunt Anita, who owns a retail store, offers Lucas a job as window cleaner. She offers to pay Lucas $250 per week after taxes for 40 hours of work. What is Lucas’ opportunity costto take the window cleaning position? Choose the best answer. (1 pt.; CIRCLE ONE) A.40 hours per week of lost free time B.There is no opportunity cost to this decision because Lucas receives the same amount of money each week in both scenarios. C.20 hours per week of lost free timeD.$250 in foregone earnings each week E.Impossible to determine from given information. Chapter 21 2. Identify whether the following statements are positive or normative. For “positive” put Pin the blank. For “normative” put Nin the blank. (½pt. each; 2 pts. total) i.__N__ Public university student tuition should be funded using a new, higher income tax. ii.__N__ The present level of income tax is unfair. iii.__P__ High mortgage interest rates encourage saving.
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