Consumption-leisure models

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Reference no: EM13860290

4 Consumption-Leisure Models

Draw the complete consumption-leisure model. Be sure to label completely and correctly.

Find the optimal consumption bundle.

Suppose that the consumer experiences an increase in real wage. Find the new optimal consumption bundle and determine the income and substitution eects. Clearly indicate both eects on consumption and leisure chosen. Lastly, state whether the income of substitution eect is dominant.

Reference no: EM13860290

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