Consider a worker who dislikes working end enjoys consuming a composite good.With labor hours on the horizontal and the composite consumption good on the vertical axis, which of the following statements are true.
A)If the worker's tastes are convex, the slope of indifference curves increases as we move to the right in the graph.
B)The worker becomes better off as we move to the northwest in the graph.
C)A tax on wage income does not change this worker's indifference map.
D)All of the above.
E)None of the above.

Question

Quizplus · Accepted Answer

If the worker's tastes are convex, the slope of indifference curves increases as we move to the right in the graph. As we move to the northwest in the graph, the worker consumes less of the composite good and works more hours, which makes the worker worse off. A tax on wage income reduces the worker's after-tax wage rate, which makes the worker worse off.

Consider a Worker Who Dislikes Working End Enjoys Consuming a Composite