6. (See week 5 Autumn Term) Assume you can work as many hours you wish at £12 per hour (net of tax). If you do not work, you have no income. You have no ability to borrow or lend, so your consumption, c, is simply equal to your income.
6. (See week 5 Autumn Term) Assume you can work as many hours you wish at £12 per hour (net of tax). If you do not work, you have no income. You have no ability to borrow or lend, so your consumption, c, is simply equal to your income.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
please answer B
![6. (See week 5 Autumn Term) Assume you can work as many
hours you wish at £12 per hour (net of tax). If you do not work,
you have no income. You have no ability to borrow or lend, so
your consumption, c, is simply equal to your income.
a) Derive and plot the feasible set, between daily values of
consumption c, and "leisure", I. Label the values at the intercepts (the
points where the feasible frontier cuts the two axes).
b) Assume that your optimal choice of consumption and leisure is to
work 8 hours per day. Illustrate this choice diagrammatically using the
feasible set and indifference curves.
c) Use indifference curves and the feasible set to show why, given
the properties of the optimal choice in part b), it is not optimal to
work, say, 10, or 6 hours per day. (continued on next slide)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbc1b7444-b3d5-4ae0-9b77-6d8fc7ed8e2f%2Fba72040f-db91-4d49-9eec-a9715d1415eb%2Fvcocc5m_processed.png&w=3840&q=75)
Transcribed Image Text:6. (See week 5 Autumn Term) Assume you can work as many
hours you wish at £12 per hour (net of tax). If you do not work,
you have no income. You have no ability to borrow or lend, so
your consumption, c, is simply equal to your income.
a) Derive and plot the feasible set, between daily values of
consumption c, and "leisure", I. Label the values at the intercepts (the
points where the feasible frontier cuts the two axes).
b) Assume that your optimal choice of consumption and leisure is to
work 8 hours per day. Illustrate this choice diagrammatically using the
feasible set and indifference curves.
c) Use indifference curves and the feasible set to show why, given
the properties of the optimal choice in part b), it is not optimal to
work, say, 10, or 6 hours per day. (continued on next slide)
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