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What factors influence an individual's decision to allocate time between work and leisure in the context of the work-leisure model?
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- What is two factors that may influence the shape of individuals’ indifference curves (flat or steep) which reflect their preferences for work or leisure? What is the difference between income effect and substitution effect under the basic work-leisure decision model?what happens in the work-leisure model, when the wage rate is decreasing and income effect is stronger than substitution effect?An individual's decision to supply her labor or to spend her time in leisure activity is known as the labor-leisure tradeoff. True or false?
- Explain in detail Discuss the possible substitution effect and the income effect of an increase in income on leisure time.Humanity is faced with a tough choice, work or leisure. Within the theory of consumer behaviour, apply the labour-leisure choice model to explain what happens when there are two (2) consecutive increases in the wage rate of a an individual and use that to derive the individual's 1.labour supply curve 2.demand for leisure curveSuppose John has 24 hours in a day. He can spend his time either working at his job where he earns $20 per hour, or he could spend it doing leisure (everything else, including sleeping). a) Using the labor-leisure choice model, draw a graph that shows his optimum labor supply would be 10 hours a day (with $0 non-labor income). Make sure your graph is completely labeled. b) On the same graph, show what would happen if he receives $100 a day in non-labor income. Breifly explain what is happening in words.
- Consider a worker who earns $20/hour in the labor market and receives $50 per week in non-labor income. Assume the total number of hours available for work (h) and leisure (L) is 168 hours per week (i.e., ? = 168 = ℎ + ?). What is the maximum value of consumption that this individual could achieve in a week? [i need this answer 4 upvotes]Suppose John has 24 hours in a day. He can spend his time either working at his job where he earns $20 per hour, or he could spend it doing leisure (everything else, including sleeping). a) Using the labor-leisure choice model, draw a graph that shows his optimum labor supply would be 10 hours a day (with $0 non-labor income). Make sure your graph is completely labeled. b) On the same graph, show what would happen if he receives $100 a day in non-labor income. Breifly explainWhat is a downward sloping?
- Why does a worker allocate his or her time over the life cycle so as to work more hours in those periods when the wage is highest? Why does the worker not experience an income effect during those periods?Marley has 100 hours per week available she can spend either working or doing leisure activities. He can work at a wage rate of $50 per hour. Bob receives $1000 of rental income per week, no matter how much he works. Use leisure-income model to solve this:- i) draw Marley budget line and optimal choice of working 80 hours in a week then calculate the maximum and optimal amount of income ii.) And suppose Marley is suppose to share the household expenses and then be taxed 50% of her wage income. then draw another diagram to compare Marley choice in Part i) and the new labour supply decision of working 90 hours per week due to the tax. Clearly label out the income effect, substitution effect and total effect in the diagram.Q..5. Provide an example case for the substitution effect of interest rates on savings, and the income effect of the interest rate on savings. You may get the inspiration from the corresponding concepts for the labor-leisure choice.