Reference no: EM132428658
1. Use the blank graph to draw budget constraint BC1 using the following information.
a. Without working at all, a student goes $200 into debt each week.
b. In a typical job, she can earn $8/hr.
c. She has 50 hours per week with which she can either study or work.
d. Suppose the student has preferences for MORE study time.
e. She chooses to work 25 hours per week.
f. Draw BC1, label the endowment point E1 and the initial work/earnings point P1.
2. Now, suppose that SeekingArrangement begins business. A student who spends 10 hours/week with clients can earn $1000/week, or $100/hr - she is not allowed to work more than 10 hours. Draw this scenario and label the new budget as BC2.
3. This economic model predicts (all else equal), the introduction of SeekingArrangement leads to an INCREASE OR DECREASE of SugarBabies.
4. It also leads to an INCREASE OR DECREASE of Study Hours.
5. This analysis gives us a better idea of the OPPORTUNITY COSTS OR VALUE JUDGEMENTS facing students given this decision.