Assume that Angelina is a peasant farmer who produces food using her own labour. (a) Show how an improvement in technology might cause Angelina's optimal labour supply to fall or rise, depending on...


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Assume that Angelina is a peasant farmer who produces food using her own labour.<br>(a) Show how an improvement in technology might cause Angelina's optimal labour supply to fall or<br>rise, depending on her preferences.<br>(b) Taking this model of production as representing the output of a typical worker, comment briefly<br>on which of the outcomes in part a) seems to match the responses of labour supply to historic rises<br>in real incomes.<br>(c) Angelina's land is stolen from her by the landowner, Brad, and she becomes Brad's slave.<br>(i) Show how Brad can maximise his own surplus, given Angelina's biological constraints.<br>(ii) Is this outcome Pareto-Efficient?<br>(d) Slavery is abolished. Brad is required to give Angelina half of everything she produces.<br>(i) Will Angelina definitely be made better off?<br>(ii) Is this equilibrium Pareto-efficient?<br>

Extracted text: Assume that Angelina is a peasant farmer who produces food using her own labour. (a) Show how an improvement in technology might cause Angelina's optimal labour supply to fall or rise, depending on her preferences. (b) Taking this model of production as representing the output of a typical worker, comment briefly on which of the outcomes in part a) seems to match the responses of labour supply to historic rises in real incomes. (c) Angelina's land is stolen from her by the landowner, Brad, and she becomes Brad's slave. (i) Show how Brad can maximise his own surplus, given Angelina's biological constraints. (ii) Is this outcome Pareto-Efficient? (d) Slavery is abolished. Brad is required to give Angelina half of everything she produces. (i) Will Angelina definitely be made better off? (ii) Is this equilibrium Pareto-efficient?

Jun 10, 2022
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