Suppose a typical income leisure constraint. The wage rate for a typical consumer is $20 per hour,...

60.1K

Verified Solution

Question

Economics

Suppose a typical income leisure constraint. The wage rate for atypical consumer is $20 per
hour, and she works 10 hours per day. Assume there are 52 weeksper year.
a. Construct a yearly income-leisure constraint for thisconsumer. Graphically show the optimal
work-leisure choice for this consumer.
b. Assume that the wage rate is increased to $25 per hour.Assuming income effect dominates,
graphically show a new possible work-leisure choice for thisconsumer.
c. Suppose that the government considers an income supplementprogram for this consumer
providing $5000 per year. Assuming holding all of theassumptions given in #b, is it a good
policy for the economy in general for this society? Explain itwith the relevant economic
theoretical justifications.

Answer & Explanation Solved by verified expert

3.6 Ratings (448 Votes)

a the optimal choice on the income leisure constraint isincome of 72800 yearly 5271020 and leisure time of 5096hours52714 square region shows leisure and triangle showshours workedNOTE THE TOP FIGURE IS BEING REFERRED TO AND THE POINTMENTIONED ON X AXIS IS NOT 728 IT IS 5096 HOURSPLEASE CORRECTWHILE YOU DRAW See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member