QUESTION ONE
Let us assume that currently, the Canada Ministry of Transport has a rule that allows commercial truck drivers to drive up a limit of 90 hours per week; after 40 hours per week, drivers’ hourly pay goes up by 50%. A proposed rule would reduce this limit to 60 hours of driving per week. One supporter of the proposal said this: “Almost no drivers are choosing to work 90 hours per week; drivers will welcome the added time away from the job.” Suppose that the proposal passes, and a subsequent study shows that after the new limit took effect, the straight-time wages of truck drivers rose, other things equal. Using economic theory, comment on this finding in the context of the quotation above; explain fully.
QUESTION TWO
Suppose the Canada government were to mandate that all employers had to offer their employees a life insurance policy worth at least C$500,000 in the event of death. Use economic theory, both positively and normatively, to analyze the effects of this mandate on employee well-being.
