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i. Saima works as a free-lance worker at a software house in Rawalpindi. Suppose she keeps awake for 100 hours a week. Also suppose that part of this time she can spend on earning money doing this job and using it for her consumption, and the rest of the time she can spend on her leisure not earning money. At first she earns Rs.500 for every hour she works. Draw a figure showing Saima's budget constraint, her indifference curve for consumption and leisure and her optimum.
ii. If per hour wage paid to her increases to Rs.600 for doing exactly the same work, draw figures to explain why she would increase her working hours or decrease her working hours.
iii. Dr. Farida is planning for her requirement. Suppose she can consume her salary of Rs. 100,000 while she is in service or save her salary to consume it after retirement. When she saves her salary, she will get 10% interest on it. Draw Dr. Farida's budget constraint, her indifference curve and her optimum.
iv. If interest rate goes up to 20%, draw figures to show when she will save more and when she will save less.
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