A person's optimal labour supply choice:
A) is similar to a person's optimal consumption rule,but with consumption and leisure as the "goods" in question.
B) is not useful in determining how many hours a person should work.
C) reveals little about a person's labour-leisure choices.
D) results in people working too much for too little pay.

Question

Quizplus · Accepted Answer

An optimal labour supply choice involves balancing the trade-off between leisure time and income from work. This is similar to the optimal consumption rule, which balances the trade-off between consumption and saving. Therefore, option A is the correct choice. Option B is incorrect because determining the optimal labour supply choice is useful in determining how many hours a person should work. Option C is also incorrect because a person's labour supply choice directly reflects their leisure choices. Option D is incorrect because an optimal labour supply choice involves choosing the quantity of work that maximizes utility, which may result in different levels of pay for different individuals.

A Person's Optimal Labour Supply Choice