2.Joe's labor supply is given in the following figure.How might the following factors affect Joe's labor supply?I. The government raises Joe's income tax rate, so now he pays 20% of his wages to the government insteadof 10%.II. The price of comfortable work shoes falls dramatically. Now, his feet won't ache nearly as much after afull day of work.III. While in Las Vegas for the weekend, Joe wins a $1 million jackpot.
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3.Let's apply the idea of compensating differentials to janitorial jobs. Suppose there are two quite similarrestaurants in the same town, OrangeBee's and the City Inn. Both have the same demand for janitorial labor.But all the janitors in town know that it's much more fun to work at City Inn. Which restaurant will pay ahigher wage for janitors? Which restaurant will hire more janitors?
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