Questions refer to the following labor-leisure diagram. The worker’s current budget line is given by line AB1 and she is working AD hours.

-The provision of a public good is best modeled by the shift to budget line:

Question

Questions  refer to the following labor-leisure diagram.  The worker’s current budget line is given by line AB1 and she is working AD hours.

-The provision of a public good is best modeled by the shift to budget line:

Quizplus · Accepted Answer

The provision of a public good typically leads to an increase in overall welfare without requiring an increase in individual work hours to finance personal consumption, as public goods are non-excludable and non-rivalrous. Thus, the model that shows a shift in the budget line without an increase in work hours (indicating no additional burden on individuals to enjoy the public good) is the most accurate. This is represented by option D, where the budget line shifts and there's a subsequent decrease in work hours to AE, reflecting the efficiency and welfare improvement public goods can provide without additional work requirements.

Questions Refer to the Following Labor-Leisure Diagram