laborexam1s07

# laborexam1s07 - Labor Exam 1 By writing your PPID below you...

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Labor Exam 1 By writing your PPID below, you are indicating February 16, 2007 your intention to abide by the honor pledge: PPID: There are ten short - answer questions worth 4 points apiece. There are two long - answer questions worth 10 points apiece. The space provided should be sufficient to answer each question. Short answer questions ( 30 minutes total ) 1. Why are university students usually not considered unemployed, even though most do not have jobs? 2. There are two important reasons that the measured unemployment rate might incorrectly report the true number of workers who want work but cannot find it. Name and brief explain these. 3. In words, describe the marginal rate of substitution between consumption and leisure. Then give the mathematical expression for the relationship between it and the utility function.

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Labor Exam 1, page 2 of 2 4. Mr. Pig s utility function is U ! C , L " = ln C + ln L , where C is his weekly consumption and L his hours of leisure. ( This utility function implies that the marginal utility of consumption is 1 C and the marginal utility of leisure is 1 L . ) There are 100 hours in the week, and he has
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laborexam1s07 - Labor Exam 1 By writing your PPID below you...

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