Scott's wage is $25 per hour and he works 50 hours a week, which is his optimal labor supply.At his optimal labor supply, his marginal utility of one hour of leisure is equal to:
A)the marginal utility he gets from $25 worth of goods.
B)the marginal utility he gets from more than $25 worth of goods.
C)the marginal utility he gets from less than $25 worth of goods.
D)the substitution effect.

Question

Quizplus · Accepted Answer

At his optimal labor supply, Scott's wage rate of $25 per hour equals the marginal utility he would receive from $25 worth of goods. Therefore, his marginal utility of one hour of leisure is equal to the marginal utility he gets from $25 worth of goods.

Scott's Wage Is $25 Per Hour and He Works 50