The condition,MRS?,C = w,describes the representative consumer's
A) investment decision.
B) consumption - savings decision.
C) current period work - leisure decision.
D) future period work - leisure decision.

Question

Quizplus · Accepted Answer

The condition MRS=C=w represents the consumer's current period work-leisure decision. MRS, the marginal rate of substitution between consumption and leisure, is equal to the wage rate (w). It means that the consumer will allocate their time between work and leisure in such a way that the extra utility gained from an hour of leisure (MRS) is equal to the wage rate (w) earned by working an extra hour. Therefore, option C is the correct choice.

The Condition,MRS?,C = W,describes the Representative Consumer's