Unformatted text preview: Graph Jessica’s budget line (b) Explain in words what Jessica’s marginal rate of substitution represents. What is her MRS when L=50 and she is on her budget line (i.e. she exhausts her budget). (c) What is Jessica’s reservation wage? Explain in words what this reservation wage represents. (d) Find Jessica’s optimal amount of leisure and consumption. Give two intuitive explanations for why this is her optimal allocation....
View Full Document
This note was uploaded on 12/06/2010 for the course ECON 4616 taught by Professor Antman during the Fall '08 term at Colorado.
- Fall '08