Econ 339 Fall 2009 Problem Set 2

Econ 339 Fall 2009 Problem Set 2 - Econ 339 Fall Quarter...

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Econ 339 Fall Quarter 2009 Problem Set 2 - Due Date: 10/14/2009 Solve the following Problems. Show your work. 1. Book Problems (p. 66): 2-2 ,2-3 ,2-10, 2-11, 2-12 2. Illustrate the effect of a wage decrease that leads to an increase in hours worked by an individual graphically. In your graph, show the income and the substitution effects. 3. Most real estate transactions pay realtors a commission of 6 percent of the sale of a property, of which 2 percentage points is paid to their real estate office. This translates to $25 an hour for the average realtor. Recently, however, a firm called TREX has adopted a system whereby the realtor pays the firm $50 a day upfront for use of the company's name, but the realtor keeps the full 6 percent commission or $37.50 an hour for the average realtor. a. Draw two budget constraints on the same graph for the average realtor working for TREX and the "standard" real estate firm if there are 20 hours in the day to work or leisure and non-labor income is equal to zero.
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This note was uploaded on 11/17/2009 for the course ECON 339 taught by Professor Habermalz during the Spring '09 term at Northwestern.

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Econ 339 Fall 2009 Problem Set 2 - Econ 339 Fall Quarter...

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