专业代写澳洲留学Economy作业论文，留学essay，英文论文代写

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Assignment Two: ECC 3710

Consider an income maintenance program. The actual subsidy (S) received by an individual can be determined by the formula: S = B – t.Y; where
B = basic benefit; t = benefit-reduction rate; Y = earned income. The break-even level of income is that Y for which S = 0.

Using this information calculate S when B = $2000, t = 0.50, Y = $2000. What is the break-even level of Y. Draw the budget constraint of this income maintenance program and analyse the impact of this program on labour supply. (10 mark)

2. Use a work leisure diagram which includes nonlabour income to portray an individual who is maximising

utility by working 8 hours per day. Now compare the labour supply effects of imposing (i) a lumpsum tax at all levels of income; and (ii) a proportional tax of say 30% on earned income. (8 mark)

3. The following statement was overheard at a party: “It is just not right that Joe, who never went to college, makes more than Jim, who has a Master’s degree. People with higher degrees deserve to earn more!” Use human capital theory to comment on this quotation. (7 mark)

4. Consider a simple two-party bargaining problem in which parties A and B are negotiating over how to split a pie of size 1. SA and SB denote A’s and B’s share of the pie where SA + SB = 1. Utility of each party is increasing in its share of the pie and exhibits diminishing marginal utility, that is, both parties are risk averse. The utility functions

专业代写澳洲留学Economy作业of A and B are U(SA) = (SA)0.5 and

U(SB) = (SB)0.5. Suppose each party believes that the arbitrator on average will award ½ of the pie if the negotiations went to arbitrations. However, each party is uncertain about the arbitrator’s decision and believes that with probability ½ may give ¼ and with probability ½ may give ¾. Using a diagram specify the contract curve. What happens to the contract curve if each party expects their share to be 1/8 and 7/8 each with probability ½? (10 mark)

Hint: for question 4 look at the appendix for chapter 13