New horizontal intercept lower than before

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Reference no: EM13148274

A worker decides how many hours to work each day. The alternative to working is to spend time in “leisure activities” which include play, sleep, eating, and any other activity besides paid work in the labor market. The worker is paid at a constant rate of $10 for each hour he works and has no other sources of income. Assume that the worker has well behaved preferences over income and hours of leisure and that there are only 24 hours in a day. Make Leisure the good on the x-axis. Imagine the wage is now $4. The wage then increases to $10. The wage then increases to $14. Each time the budget constraint: a. Rotates clockwise with new vertical intercept higher than before and new horizontal intercept lower than before. b. Rotates counter-clockwise with new vertical intercept lower than before and new horizontal intercept higher than before. c. Rotates clockwise with new vertical intercept higher than before but unchanged horizontal intercept. d. Rotates counter-clockwise with new vertical intercept lower than before but unchanged horizontal intercept.

Reference no: EM13148274

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