(Figure: Budget Constraint for Work or Leisure I)
a. Graph a budget constraint assuming a person has 24 hours that can be used for work or leisure at a wage rate of $20. Note the optimal consumption-leisure bundle.
b. Graph a budget constraint assuming a person has 24 hours that can be used for work or leisure at a wage rate of $30. Note the optimal consumption-leisure bundle.
c. Determine both the income and substitution effects on the graph.

Question

(Figure: Budget Constraint for Work or Leisure I)  
a. Graph a budget constraint assuming a person has 24 hours that can be used for work or leisure at a wage rate of $20. Note the optimal consumption-leisure bundle.
b. Graph a budget constraint assuming a person has 24 hours that can be used for work or leisure at a wage rate of $30. Note the optimal consumption-leisure bundle.
c. Determine both the income and substitution effects on the graph.

Quizplus · Accepted Answer

The Answer of (Figure: Budget Constraint for Work or Leisure I)  
a. Graph a budget constraint assuming a person has 24 hours that can be used for work or leisure at a wage rate of $20. Note the optimal consumption-leisure bundle.
b. Graph a budget constraint assuming a person has 24 hours that can be used for work or leisure at a wage rate of $30. Note the optimal consumption-leisure bundle.
c. Determine both the income and substitution effects on the graph.