2. Utility maximization - Trading off labor and leisure The indifference curves on the following graph show Valerie's preferences for leisure and consumption for increasing levels of utility, such that her utility increases in both consumption and leisure. Assuming that Valerie spends 68 hours each week sleeping, she has a maximum of 100 hours available to her for leisure if she does not work at all. Initially, she works 50 hours (and thus has 50 hours of leisure) and earns $400 per week. Use the grey paint (star symbol) to indicate Valerie's initial leisure/consumption bundle. Dashed drop lines will automatically extend to both awes CONSUMPTION (Dollars per week) 1000 900 800 700 600 500 300 200 100 0 0 10 20 30 40 50 00 70 80 LEISURE (Hours per week) 00 100 110 Initial bundle ·|·1· $350 Unemployment Benefits Equivalent Bundle, $200 Unemployment Benefits Equivalent Bundle,

2. Utility maximization - Trading off labor and leisure The indifference curves on the following graph show Valerie's preferences for leisure and consumption for increasing levels of utility, such that her utility increases in both consumption and leisure. Assuming that Valerie spends 68 hours each week sleeping, she has a maximum of 100 hours available to her for leisure if she does not work at all. Initially, she works 50 hours (and thus has 50 hours of leisure) and earns $400 per week. Use the grey paint (star symbol) to indicate Valerie's initial leisure/consumption bundle. Dashed drop lines will automatically extend to both awes CONSUMPTION (Dollars per week) 1000 900 800 700 600 500 300 200 100 0 0 10 20 30 40 50 00 70 80 LEISURE (Hours per week) 00 100 110 Initial bundle ·|·1· $350 Unemployment Benefits Equivalent Bundle, $200 Unemployment Benefits Equivalent Bundle,

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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