Consider a representative consumer that has preferences over bundles of consumption goods c, and leisure l. The consumer's preferences satisfy the properties: more is pre- ferred to less; preference for diversity; normality. The consumer is endowed with an endowment of total hours h. Let the consumer's real wage per hour worked in terms of the consumption good be w. Real firm profits, which are distributed to consumers as dividends, are denoted II. The real lump-sum taxes paid by consumers to the government are T. Assume that II > T.

Something that is perceived as a luxury rather than a need is something that brings pleasure. Worldwide, the majority of people view food, shelter, and water as requirements. Undoubtedly, indoor plumbing and electricity would be included on the list by many Americans. As opposed to being a luxury, internet connection is increasingly considered as a need. But is it actually essential for surviving? What then happens to those who don't utilize or have access to the internet? Could the expansion of e-commerce be impacted by how people view Internet connection as a need or a luxury?

What is your opportunity cost for taking the time to study for a test?

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