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Unformatted text preview: individuals. a. Use the concepts of income and substitution effects to explain why an increase in lump-sum tax will increase the amount of labor supplied. b. Suppose T = 35. What are the equilibrium values of employment and real wage? c. With T remaining equal to 35, the government passes minimum wage legislation that requires firms to pay a minimum wage of 7. What is resulting employment level? 4. How would each of the following affect the equilibrium employment and real wage? a. A large number of immigrants enter the country b. A new law mandates the shutdown of some unsafe forms of capitals c. Energy supplies become depleted d. The federal government offers parents a subsidy in order to encourage them to stay at home with their children...
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This note was uploaded on 04/15/2010 for the course ECON 291 taught by Professor J liu during the Summer '07 term at Simon Fraser.
- Summer '07
- J Liu