06.02.supply2

06.02.supply2 - Prof. Simon D. Woodcock BUEC 280 Lecture 10...

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Unformatted text preview: Prof. Simon D. Woodcock BUEC 280 Lecture 10 Individual Labour Supply Continued Prof. Simon D. Woodcock Last day Assumptions underlying the labour-leisure choice model of individual labour supply Defined income and substitution effects Indifference curves Today – more, more, more Prof. Simon D. Woodcock The budget constraint Just like in consumer choice theory, our decision- maker faces a budget constraint It defines the set of feasible allocations of consumption goods (or money income, Y) and leisure (L) At a given wage W, the more you work, the more you earn, and hence the more you can consume So what’s the rate at which you can trade off L and Y? Prof. Simon D. Woodcock The budget constraint Assume our decision maker has no non-labour income Recall T is total discretionary time (can be allocated to leisure or work, T = L + H) If you work zero hours, L = T,...
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This note was uploaded on 10/12/2009 for the course BUEC 280 taught by Professor Simonwoodcock during the Spring '07 term at Simon Fraser.

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06.02.supply2 - Prof. Simon D. Woodcock BUEC 280 Lecture 10...

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