Javon has 80 hours per week to allocate between labor and leisure. Javon's wage is $8 per hour. Graph hours of leisure per week on the horizontal axis and income per week on the vertical axis. According to the optimal time allocation rule, Javon should allocate his time such that the marginal utility of an additional hour of leisure is:
A) $8.
B) $10.
C) $640.
D) $800.

Question

Quizplus · Accepted Answer

The optimal time allocation rule states that the marginal utility of an additional hour of leisure should equal the wage rate, which is $8 per hour in this case.

Javon Has 80 Hours Per Week to Allocate Between Labor