8. The individual's budget line (in the neo-classical consumption -leisure choice model) switches from BL₁ to BL2. What change(s)could have caused this?CBL₁BL 2a decrease in the wage only.TlO an increase in the wage only.O an increase in non-labor income only.O an increase in both the wage and non-labor income.O a decrease in the wage, but an increase in non-labor income.

The neoclassical consumption-leisure choice model is an economic framework that analyzes how…

8. The individual's budget line (in the neo-classical consumption leisure choice model) switches from BL₁ to BL2. What change(s) could have caused this? C BL₁ BL 2 a decrease in the wage only. an increase in the wage only. T l O an increase in non-labor income only. O an increase in both the wage and non-labor income. O a decrease in the wage, but an increase in non-labor income.

8. The individual's budget line (in the neo-classical consumption leisure choice model) switches from BL₁ to BL2. What change(s) could have caused this? C BL₁ BL 2 a decrease in the wage only. an increase in the wage only. T l O an increase in non-labor income only. O an increase in both the wage and non-labor income. O a decrease in the wage, but an increase in non-labor income.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

8. The individual's budget line (in the neo-classical consumption -
leisure choice model) switches from BL₁ to BL2. What change(s)
could have caused this?
C
BL₁
BL 2
a decrease in the wage only.
T
l
O an increase in the wage only.
O an increase in non-labor income only.
O an increase in both the wage and non-labor income.
O a decrease in the wage, but an increase in non-labor income.

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Step 1: Introduce the consumption-leisure choice model

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Step 2: Determine the general equation of budget line:

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Step 3: Determine the impact on budget constraint when wage changes.

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Step 4: Determine the impact on budget constraint when V changes

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Step 5: Determine the correct option and incorrect options

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