Consider an individual who decides to allocate time between different activities. For simplicity suppose that there are two activities: working and leisure. Denote by tw the time spent for working and to the time spent for leisure and suppose that individual gains utility denoted by U(tw, t₁). Consider that the individual has 16 hours a day in total that can be spent for working and/or leisure. a) Discuss possible preferences the individual might have and graphically illustrate some examples of indifference curves associated to these preferences. b) Graphically illustrate the time constraint the individual faces. c) Graphically illustrate the optimal time allocation of the individual. Explain why it is optimal by comparing to a sub-optimal allocation choice. (6 Ca 1. 11.

Consider an individual who decides to allocate time between different activities. For simplicity suppose that there are two activities: working and leisure. Denote by tw the time spent for working and to the time spent for leisure and suppose that individual gains utility denoted by U(tw, t₁). Consider that the individual has 16 hours a day in total that can be spent for working and/or leisure. a) Discuss possible preferences the individual might have and graphically illustrate some examples of indifference curves associated to these preferences. b) Graphically illustrate the time constraint the individual faces. c) Graphically illustrate the optimal time allocation of the individual. Explain why it is optimal by comparing to a sub-optimal allocation choice. (6 Ca 1. 11.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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