Exam 23: Indifference Curve Analysis

Use the following to answer questions : Figure: Joanna's Time Allocation Budget Line -(Figure: Joanna's Time Allocation Budget Line)The figure Joanna's Time Allocation Budget Line depicts what happens when she can choose how to spend 40 hours.What is the opportunity cost of an hour of leisure?

Dorothy is trying to decide how to allocate her time between work and leisure.Suppose that she can work a maximum of 75 hours per week.If she can earn $15 per hour,the vertical intercept of her time allocation budget line (with income plotted vertically and leisure plotted horizontally)is:

Javon has 80 hours per week to allocate between labour and leisure.Graph hours of leisure per week on the horizontal axis and income per week on the vertical axis.If Javon's hourly wage is $8,then the opportunity cost of an hour of leisure is:

While individual labour supply curves may bend backward,market labour supply curves are likely to be upward-sloping throughout,since higher wages induce new workers to enter the labour market.

To maximize utility,an individual should allocate time so that the marginal utility of the earnings from an hour spent working is equal to the marginal utility of an additional hour of leisure.

Use the following to answer questions : Figure: Davina's Labour Supply Choice -(Figure: Davina's Labour Supply Choice)The figure Davina's Labour Supply Choice shows Davina's time allocation budget line when her hourly wage is $10 or $15 and she has 80 hours to allocate between labour and leisure;it also shows two of her indifference curves for income and leisure.As Davina's hourly wage rises from $10 to $15:

Use the following to answer questions : Figure: Rita's Time Allocation Budget Line -(Figure: Rita's Time Allocation Budget Line)Look at the figure Rita's Time Allocation Budget Line.It is based on 80 hours available for labour and leisure.Rita chooses 40 hours of leisure and an income of $280.When her hourly wage doubles,Rita chooses 50 hours of leisure and an income of $420.The substitution effect is making her work _____,the income effect is making her work _____,and the substitution effect is _____ than the income effect.

Assume that Alex is maximizing utility by working 51 hours per week and his wage is $15 per hour.Which of the following statements is CORRECT?

Use the following to answer questions : Figure: Joanna's Time Allocation Budget Line -(Figure: Joanna's Time Allocation Budget Line)Joanna's Time Allocation Budget Line depicts what happens when she can choose how to spend 40 hours.If Joanna's wage rate increases and she ends up working more hours,for her:

Use the following to answer questions : Figure: Rita's Time Allocation Budget Line -(Figure: Rita's Time Allocation Budget Line)Look at the figure Rita's Time Allocation Budget Line.It is based on 80 hours available for labour and leisure.Her hourly wage is:

Use the following to answer questions : Figure: The Time Allocation Budget Line -Diana's labour supply curve changes slope and begins to bend backward at a wage of $44.Thus,for a wage _____ $44,the substitution effect of a wage increase will _____.

Javon has 80 hours per week to allocate between labour and leisure.Javon's wage is $8 per hour.Graph hours of leisure per week on the horizontal axis and income per week on the vertical axis.According to the optimal time allocation rule,Javon should allocate his time such that the marginal utility of an additional hour of leisure is:

If leisure is a normal good for Randy,then both the substitution effect and the income effect of a decrease in the wage rate will cause Randy to work fewer hours.

Consider the time allocation budget line for Priya.Put hours of leisure on the horizontal axis and income on the vertical axis.If Priya can allocate 100 hours per week to either leisure or work and her wage per hour is $18,then the vertical intercept is _____ and the slope of the time allocation budget line is _____.

Use the following to answer questions : Figure: Rita's Time Allocation Budget Line -(Figure: Rita's Time Allocation Budget Line)Look at the figure Rita's Time Allocation Budget Line.It is based on 80 hours available for labour and leisure.If her hourly wage doubles,the new time allocation budget line will have a point at _____ hours of leisure and _____ in income.

Use the following to answer questions : Figure: Income and Leisure Opportunities -(Figure: Income and Leisure Opportunities)Given Keisha's preferences and opportunities for income and leisure shown in the figure Income and Leisure Opportunities,Keisha sees leisure as:

An individual will allocate time between labour and leisure by finding the point at which:

Use the following to answer questions : Figure: The Time Allocation Budget Line -(Figure: The Time Allocation Budget Line)Look at the figure The Time Allocation Budget Line.If the wage rate decreases,then the time allocation budget line will rotate:

Javon has 80 hours per week to allocate between labour and leisure.Graph hours of leisure per week on the horizontal axis and income per week on the vertical axis.If Javon's hourly wage is $8,then the horizontal intercept of his time allocation budget line is:

Javon has 80 hours per week to allocate between labour and leisure.Graph hours of leisure per week on the horizontal axis and income per week on the vertical axis.If Javon's hourly wage is $8,then the vertical intercept of his time allocation budget line is: