The number of hours in a day can represent a budget constraint,and the two goods

Question

The number of hours in a day can represent a budget constraint,and the two goods in the model can be consumption [through income]and leisure. There are 168 hours in a week. Of these, about 60hours will go to sleeping (more or less). That leaves 108 hours forwhich we have a choice in terms of how we will spend that time.Let’s assume that we will spend the 108 hours in either workor leisure, or some kind of combination of the two.

A. What factors would you consider in making the choice of how youwill allocate your time between work and leisure?
B. Would these factors change as your earnings increased? As youaged?

Explanation / Answer

B) Yes, along the IEP (Income expansion path); however, youwould still seek to maximize utility by finding the intersection ofyour highest indifference curve with your budget constraint.
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