ECO10004 Lecture 1: RESOURCES

Info: C = w(h-l) + I- T

Question:

1. Suppose both consumption good  and leisure are normal goods, discuss without any graphs what will happen to the household's choice if there is:

a) an increase in dividend income I

b) An increase in wage w

2. Suppose now only the consumption good is normal, and leisure is inferior. Repeat the last question's procedure.

48) This opening to trade may upset some in each country. We might expect UK__producers and US producers to protest against this change: A) (C, W) B) ( CC) C) (W, W) D) (WC) E) none of the above.

In one sentence, explain the logic or intuition behind each of the following equations. 

a. MRP_L= MP_L * MR

b. MP_L =W/P

c. W/MP_L =C/MP_K