Q3. Suppose the market wage is w, Tom's parents give him N dollars per month, and Tom has T hours per month to distribute between leisure and working, assume leisure is a normal good. a)  Please graph Tom's income constraint in a figure with the consumption on the vertical axis and leisure on the horizontal axis. Please clearly label all the intercepts and slope in the graph. b)  Suppose the market wage increases from w to w1, please draw the new constraint curve in the same graph in a) c) i)Associated with the wage increase in b), there is an overall increase of working hours for Tom. what effects are associated Tom's increasing working hours, please interpret/explain each effect and its direction carefully.      ii)Please show the affects you discussed from c) in the same graph of a) on horizonal axis and label clearly

Consider Laura who makes $1,400 per week and just won a ‘set for life’ lottery ticket which involves a fortnightly payment of $10,000 for 20 years. Currently she works 35 hours per week. Do the following:  1. Illustrate the effect of the lottery win on lauras budget constraint using a fully labelled diagram where i) the horizontal axis represents the hours of free time per week, and ii) the vertical axis represents lauras weekly consumption.  2. Illustrate on the same diagram lauras optimal decisions before and after the lottery win along with his indifference curves.    3. Based on your diagram, discuss whether Laura will quit her job.

8. Fabian consumes X and Y and the following utility function represents his utility: U = 2XY a. With a utility function of U = 2XY, Fabian's MU, = 2Y and his MU, = 2x ,where MU is marginal utility. Write an equation for Fabian's marginal rate of substitution (MRS). b. Suppose Fabian's income is $120 and Px = S6 and Py-$2, where Px is the price of X and Py is the price of Y. Write an equation for Fabian's budget constraint. c. Write the equation that equates the slope of Fabian's budget constraint to the slope of Fabian's indifference curve: d. If Fabian is spending all of his income, how much X and how much Y will he choose? Use the equations you wrote in part's b and c to answer this question. e. What will Fabian's utility be with this combination of X and Y? f. Now suppose the price of X increases to P.=10. Write the equation that equates the slope of Fabian's budget constraint to the slope of Fabian's indifference curve. How will this change the optimal combination of X and Y? What…

Gabriel has a weekly income (N) of $50, which he uses to purchase cupcakes (C) and tea (7). The price of a cupcake is $1, and the price of tea is $2.50. Suppose Gabriel's income increases to $100, and the prices of both cupcakes and tea remain unchanged. Given this income change, one would expect Gabriel's budget line to: O shift to the right. shift to the left. rotate around the tea axis point. not be affected.