Author Question: What determines how much labor a household will supply? What will be an ideal ... (Read 42 times)

audie · **on:** Jun 29, 2018

What determines how much labor a household will supply?

What will be an ideal response?

Question 2

What argument do you believe policymakers use in some states to justify exempting unprepared food from sales tax? (Hint: the income elasticity of food is less than one)

What will be an ideal response?

Carissamariew · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

Households will supply labor as long as the wage they receive exceeds the value of leisure or the value from unpaid work.

Answer to Question 2

Since the income elasticity of food is less than one that means that expenditure on food tends to represent a higher portion of a poor person's income. By making unprepared foods exempt from sales tax policymakers are attempting to reduce the regressivity of the sales tax overall.