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that John’s wage rises from $200 to $210 per day Show how his equilibrium level of income and labor leisure will change

that John’s wage rises from $200 to $210 per day. Show how his equilibrium level of income and labor–leisure will change. 7. Suppose that John is ill ten days per year. Draw the impact of this illness on the equilibrium defined in Exercise 5. How will it change his equilibrium allocation of earnings and labor vs. leisure? 8. Answer the following. (a) Depict Sara’s optimal stock of health capital at age 18, with a high school diploma and a wage of $8 per hour. (b) Suppose that she invests in a college education, expecting to get a better and higher-wage job. Show how her optimal stock of health capital changes by the age of 30 due to the increased wage. Then, show how her education would affect her optimal health stock if education also made her a more efficient producer of health. (c) Suppose that after age 30 her wage stays the same. As she ages, show what happens to her optimal stock of health capital, assuming that the depreciation rate of health increases with age

Apr 30 2020 View more View Less

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