ECO 3123 Study Guide - Midterm Guide: Normal Good, Demand Curve, Opportunity Cost
8 Dec 2016
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Assess slack in the labor market (people who aren"t looking for work can be unemployed or leave market altogether. Labor supply is a function of demand for nmt. If it"s a low wage rate, demand more nonmarket time. Personal wealth: capital wealth (nonmarket income) and human skills. Reservation wage? wage that would be just enough to entice workers into the force. Utility is a function of goods and leisure. All combinations of goods that give you the same utility. Steep: high value on extra hour of leisure. Income effect & substitution effect on labor supply. More income, demand more leisure, labor supply decreases. When the price of leisure (wage) goes up, labor supply increases. If w increase or taxes decrease or insurance decrease. Specific: specific to firm and how they do things. Nonpecuniary costs: things given up, time, take classes you don"t like. Invest if c is equal to or less than pv.
