Labor Economics
Labor Economics
7th Edition
ISBN: 9780078021886
Author: George J Borjas
Publisher: McGraw-Hill Education
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Chapter 2, Problem 1P
To determine

Explain the effect of the indifference curve in the leisure hours allocated by the people.

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How many hours will a person allocate to leisure activities if her indifference curves between consumption and goods are concave to the origin?
Would you expect total utility to rise or fall with additional consumption of a good? Why?
Dave currently consumes 10 hot dogs and 6 sodas each week.  At his current consumption basket, his marginal utility for hot dogs is 5 and his marginal utility for sodas is 3.  If the price of one hot dog is $1 and the price of one soda is $0.50, is Dave currently maximizing his utility?  If not, how should he reallocate his spending to increase utility?
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