Use the following formula to answer the indicated question: Welfare benefit = Maximum benefit - 0.4 [Wages - (Work expenses + Child care costs)] Suppose Emily works 1,800 hours per year at a wage of $8 per hour, has child care expenses of $4,000 per year, and has work expenses of $1,000. If the state maximum welfare benefit is $12,000 per year, based on the welfare formula given, Emily's welfare benefit will be
A. $3,760.
B. $2,600.
C. $8,240.
D. Zero because her income exceeds the limit.
Answer: C
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If the cross elasticity of demand between car insurance and new cars is -0.41, then car insurance and new cars are
A) complements. B) substitutes. C) normal goods. D) inferior goods. E) unrelated goods.
During droughts, cities often impose water use restrictions on consumers. Suppose a representative consumer has preferences for Water (W) and other goods (X) given by the utility function:
U(W,X) = WX. Suppose the price of other goods is $1 and the price of water is initially 50ยข. The consumer has a budget of $50/week. a. How much water will the consumer purchase each week? b. Suppose the government imposes a quota on water use of 50 units/week. Show that the quota reduces the representative consumer's utility. c. By how much does the quota harm the representative consumer? Specifically, compute the equivalent variation of the quota.
Keynesians believe that the transactions demand for money influences the velocity of money
Indicate whether the statement is true or false
While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that
a. trade can make everyone better off. b. rational people think at the margin. c. people face tradeoffs. d. people respond to incentives.