3 Does the substitution or income effect dominate wages between $10 and $30 per hour? Between $30 and $40 per hour? Between $40 and $50 per hour? How much would she earn at each hypothetical wage rate? Jake Goldstone is working 30 hours per week His marginal utility of income is 2, his marginal utility of leisure is 60, and his hourly wage is $20 Assume throughout this problem that the income effect is zero Is Mr Goldstone maximizing his utility? Would working more or less increase his utility? If his wage rose to $30 per hour, would he be maximizing his utility by working 30 hours per week? If not, should he work more or fewer hours? At a wage of $40 per hour, would he be maximizing his utility? If not, would working more or less than 30 hours per week increase his utility? The table below describes the perfectly competitive market for dishwashers Quantity demanded Quantity supplied Wage per day per day per day (in thousands) (in thousands) $50 4.0 1.0 100 3.5 2.0 150 3.0 3.0 200 2.5 4.0 Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 674