Q 32

Jack earns 5 dollars per hour. He has 100 hours per week which he can use for either labor or leisure. The government institutes a plan in which each worker receives a $100 grant from the government but has to pay 50% of his or her labor income in taxes. If Jack's utility function is U(c, r) = cr, where c is dollars worth of consumption of goods and r is hours of leisure per week, how many hours per week will Jack choose to work?
A) 30
B) 40
C) 26
D) 20
E) None of the above.

Q 33

Aristotle earns 5 dollars per hour. He has 110 hours per week available for either labor or leisure. In the old days he paid no taxes and received nothing from the government. Now he gets a $200 payment per week from the government but he must pay half of his labor income in taxes. (His before-tax wages are the same as they were before, and he has no other source of income than wages and payments from the government.) He notices that with the government payment and his taxes, he can exactly afford the combination of leisure and consumption goods that he used to choose. How many hours per week did he work in the old days?
A) 100
B) 20
C) 45
D) 60
E) None of the above.

Q 34

Rhoda takes a job with a construction company. She earns $5 an hour for the first 40 hours of each week and then gets "double-time" for overtime. That is, she is paid $10 an hour for every hour beyond 40 hours a week that she works. Rhoda has 70 hours a week available to divide between construction work and leisure. She has no other source of income, and her utility function is U = cr, where c is her income to spend on goods and r is the number of hours of leisure that she has per week. She is allowed to work as many hours as she wants to. How many hours will she work?
A) 50
B) 30
C) 45
D) 35
E) None of the above.