Draw jeff indifference map

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Jeff gets utility from combinations of leisure (l) and consumption (c), and l is an inferior good for Jeff.

(a) Draw Jeff's indifference map.

(b) Given that he has non-labor income of y, can work at the hourly wage w, and can buy c at the price pc per unit, illustrate the (l, c) combination that maximizes Jeff's utility.

(c) Suppose Jeff's wage rate rises from w1 to w2 (i.e., w1 < w2 ). Illustrate in an indifference curve diagram Jeff's substitution and income effects on l.

(d) Based on your answer to (c), what can we conclude about the slope of Jeff's labor supply curve? Draw a diagram of that labor supply curve (i.e., w on the vertical axis, labor (L) on the horizontal axis).

Reference no: EM132456688

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