Use the following figure to answer the question : Figure 17-1 : shows the weekly income (in dollars)and leisure (in hours)of a worker using an indifference curve and a budget line.

-In Figure 17-1,assume the worker is initially in equilibrium at point A.Weekly earnings and work effort are _____ respectively.

Question

Use the following figure to answer the question : Figure 17-1 : shows the weekly income (in dollars)and leisure (in hours)of a worker using an indifference curve and a budget line.

-In Figure 17-1,assume the worker is initially in equilibrium at point A.Weekly earnings and work effort are _____ respectively.

Quizplus · Accepted Answer

At equilibrium point A, the indifference curve is tangent to the budget line. From point A, the worker can choose between point N or point S1. However, N has lower income and the same leisure time, so it is not the best choice. On the other hand, S1 has the same income as A, but has more leisure time, so at S1, the worker can achieve a higher level of utility, making it the best choice. Therefore, the weekly earnings and work effort at equilibrium point A are OY₁ and NL₂, respectively.

Use the Following Figure to Answer the Question : Figure