Scott's wage is $25 per hour and he works 50 hours a week, which is 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

Scott's optimal labor supply means he is maximizing his utility, so the marginal utility of leisure must equal the marginal utility of the wage he earns per hour, which is $25 worth of goods.

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