Assignment2 - choice diagram. (10 marks) 2. In a carefully...

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BUEC 280 Assignment 2 Due 10:30 Tuesday November 9 1. Consider Weili. She has unearned income of y and is offered a wage rate of w. At this offered wage rate, she chooses to work a positive number of hours in the paid labour market. a . Using a consumption/leisure choice diagram, illustrate her labour supply decision. (10 marks) b. Scenario 1: Weili’s grandmother dies, and she receives a substantial bequest that generates income of z. How does this bequest affect Weili’s labour supply? He r utility? Illustrate using a consumption/leisure choice diagram. (10 marks) c. Scenario 2 (this scenario is independent of scenario 1): Weili becomes a mother. How does this happy event affect Weili’s labour supply? Illustrate using a consumption/leisure
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Unformatted text preview: choice diagram. (10 marks) 2. In a carefully labeled diagram, illustrate the wage and employment decision of a firm that is both a monopolist in the product market and a monopsonist in the labour market. (20 marks) 3. Consider two firms. In one firm, the technology is such that it is relatively difficult to substitute labour for capital and vice versa. In another firm, this is easy. Which firm has the more elastic labour demand curve in the long-run? Explain with reference to a carefully labeled diagram. (20 marks) 4. A monopolist hires fewer workers than a competitive firm because it produces less output than a competitive firm. True, false or uncertain. Explain with reference to a carefully labeled diagram. (20 marks)...
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