Question

Suppose there are 8,000 hours in a year (actually there are 8,760 ) and that an individual has a potential market wage of $\$ 5$ per hour. a. What is the individual's full income? If he or she chooses to devote 75 percent of this in come to leisure, how many hours will be worked? b. Suppose a rich uncle dies and leaves the individual an annual income of $\$ 4,000$ per year. If he or she continues to devote 75 percent of full income to leisure, how many hours will be worked? c. How would your answer to part (b) change if the market wage were $\$ 10$ per hour instead of $\$ 5$ per hour? d. Graph the individual's supply of labor curve implied by parts (b) and (c).

          Suppose there are 8,000 hours in a year (actually there are 8,760 ) and that an individual has a potential market wage of $\$ 5$ per hour.
a. What is the individual's full income? If he or she chooses to devote 75 percent of this in come to leisure, how many hours will be worked?
b. Suppose a rich uncle dies and leaves the individual an annual income of $\$ 4,000$ per year. If he or she continues to devote 75 percent of full income to leisure, how many hours will be worked?
c. How would your answer to part (b) change if the market wage were $\$ 10$ per hour instead of $\$ 5$ per hour?
d. Graph the individual's supply of labor curve implied by parts (b) and (c).

Added by Justin F.

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