Leandro has 16 hours per day that he can allocate to work or leisure. His job pays a wage rate of $20. Leandro decides to consume 8 hours of leisure. His indifference curves have the usual shape: they slope downward, they do not cross, and they have the characteristic convex shape. a. Draw Leandro's time allocation budget line for a typical day. Then illustrate the indifference curve at his optimal choice. b. Now Leandro's wage rate falls to $10. c. Draw Leandro's new budget line. d. Suppose that Leandro now works only 4 hours as a result of his reduced wage rate. Illustrate the indifference curve at his new optimal choice.

Leandro has 16 hours per day that he can allocate to work or leisure. His job pays a wage rate of $20. Leandro decides to consume 8 hours of leisure. His indifference curves have the usual shape: they slope downward, they do not cross, and they have the characteristic convex shape. a. Draw Leandro's time allocation budget line for a typical day. Then illustrate the indifference curve at his optimal choice. b. Now Leandro's wage rate falls to $10. c. Draw Leandro's new budget line. d. Suppose that Leandro now works only 4 hours as a result of his reduced wage rate. Illustrate the indifference curve at his new optimal choice.

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

2. Leandro has 16 hours per day that he can allocate to work or leisure. His job pays a wage rate of
$20. Leandro decides to consume 8 hours of leisure. His indifference curves have the usual shape:
they slope downward, they do not cross, and they have the characteristic convex shape.
a. Draw Leandro's time allocation budget line for a typical day. Then illustrate the indifference
curve at his optimal choice.
b. Now Leandro's wage rate falls to $10.
c. Draw Leandro's new budget line.
d. Suppose that Leandro now works only 4 hours as a result of his reduced wage rate. Illustrate the
indifference curve at his new optimal choice.

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