Garfield enjoys pizzas and hanging out (leisure). He sleeps 8 hours per day. Of the remaining 16 hours, for each hour he chooses to work he gets paid 2 pizzas. Garfield must pay 6 pizzas in taxes but receives dividends equivalent to 6 pizzas. 1. Draw Garfield’s budget constraint (put consumption on the vertical axis and leisure of the horizontal). Make sure to show the vertical and horizontal intercepts as well as the slope. b. Now suppose that Garfield chooses to work 10 hours per day. Find how many hours of leisure and how many pizzas he will consume. c. Using your answer from b, show Garfield’s optimal point on the budget line and draw the indifference curve passing from that point. 4. Suppose that Garfield’s wage falls to 1 pizza per hour. Draw Garfield’s new budget constraint. Make sure to show the value of any intercept that has changed. 5. Suppose that in response, Garfield decides to work for 6 hours per day. How much leisure will he take, and how much pizza will he consume? 6. Use an indifference curve to show the new optimal point.
Garfield enjoys pizzas and hanging out (leisure). He sleeps 8 hours per day. Of the remaining
16 hours, for each hour he chooses to work he gets paid 2 pizzas. Garfield must pay 6 pizzas in
taxes but receives dividends equivalent to 6 pizzas.
1. Draw Garfield’s budget constraint (put consumption on the vertical axis and leisure of the
horizontal). Make sure to show the vertical and horizontal intercepts as well as the slope.
b. Now suppose that Garfield chooses to work 10 hours per day. Find how many hours
of leisure and how many pizzas he will consume.
c. Using your answer from b, show Garfield’s optimal point on the budget line and draw
the indifference curve passing from that point.
4. Suppose that Garfield’s wage falls to 1 pizza per hour. Draw Garfield’s new budget
constraint. Make sure to show the value of any intercept that has changed.
5. Suppose that in response, Garfield decides to work for 6 hours per day. How much leisure
will he take, and how much pizza will he consume?
6. Use an indifference curve to show the new optimal point.
7. Is Garfield better off or worse off than before and why?
8. Is the income or substitution effect stronger in this exercise and why?
9. Using your answers draw a supply of labor for Garfield and explain how quantity of labor
supplied is related to the wage
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Garfield enjoys pizzas and hanging out (leisure). He sleeps 8 hours per day. Of the remaining
16 hours, for each hour he chooses to work he gets paid 2 pizzas. Garfield must pay 6 pizzas in
taxes but receives dividends equivalent to 6 pizzas.
1. Draw Garfield’s budget constraint (put consumption on the vertical axis and leisure of the
horizontal). Make sure to show the vertical and horizontal intercepts as well as the slope.
b. Now suppose that Garfield chooses to work 10 hours per day. Find how many hours
of leisure and how many pizzas he will consume.
c. Using your answer from b, show Garfield’s optimal point on the budget line and draw
the indifference curve passing from that point.
4. Suppose that Garfield’s wage falls to 1 pizza per hour. Draw Garfield’s new budget
constraint. Make sure to show the value of any intercept that has changed.
5. Suppose that in response, Garfield decides to work for 6 hours per day. How much leisure
will he take, and how much pizza will he consume?
6. Use an indifference curve to show the new optimal point.
7. Is Garfield better off or worse off than before and why?
8. Is the income or substitution effect stronger in this exercise and why?
9. Using your answers draw a supply of labor for Garfield and explain how quantity of labor
supplied is related to the wage
(I have answered for 1-3) I need answers for the remaining section 4-9
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