Kurt earns a wage of $100 per hour; Jim earns a wage of $10 per hour. To maximize utility, Kurt works 45 hours per week and Jim works 50 hours per week. The value of an additional hour of leisure is:
A) higher for Jim than for Kurt.
B) higher for Kurt than for Jim.
C) less than $100 for Kurt.
D) greater than $10 for Jim.

Question

Quizplus · Accepted Answer

Kurt earns significantly more per hour than Jim, so the opportunity cost of an additional hour of leisure is higher for Kurt. This means the value of an additional hour of leisure is higher for Kurt than for Jim, as Kurt sacrifices more income for leisure.

Kurt Earns a Wage of $100 Per Hour; Jim Earns