Ms. Shanila works as a free-lance worker at a software house. Suppose she keeps awake for 100 hours a week. Also suppose that part of this time she can spend on earning money doing this job and using it for her consumption, and the rest of the time she can spend on her leisure not earning money. At first, she earns Rs.500 for every hour she works. Draw a figure showing Shanila’s budget constraint, her indifference curve for consumption and leisure and her optimum. ii If per hour wage paid to her increases to Rs.600 for doing exactly the same work, draw figures to explain why she would increase her working hours or decrease her working hours.
Ms. Shanila works as a free-lance worker at a software house. Suppose she keeps awake for 100 hours a week. Also suppose that part of this time she can spend on earning money doing this job and using it for her consumption, and the rest of the time she can spend on her leisure not earning money. At first, she earns Rs.500 for every hour she works. Draw a figure showing Shanila’s budget constraint, her indifference curve for consumption and leisure and her optimum. ii If per hour wage paid to her increases to Rs.600 for doing exactly the same work, draw figures to explain why she would increase her working hours or decrease her working hours.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
100%
Ms. Shanila works as a free-lance worker at a software house. Suppose she keeps awake for
100 hours a week. Also suppose that part of this time she can spend on earning money doing this job and using it for her consumption, and the rest of the time she can spend on her leisure not earning money. At first, she earns Rs.500 for every hour she works. Draw a figure showing Shanila’s budget constraint, her indifference curve for consumption and leisure and her optimum.
ii If per hour wage paid to her increases to Rs.600 for doing exactly the same work, draw figures
to explain why she would increase her working hours or decrease her working hours.
iii Mr. Khan is planning for his requirement. Suppose he can consume his salary of Rs. 100,000 while he is in service or save his salary to consume it after retirement. When he saves his salary he will get 10% interest on it. Draw Dr. Khan’s budget constraint, his indifference curve and his optimum.
iv If interest rate goes up to 20%, draw figures to show when he will save more and when he will save less.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education