Recall that when buyers in a goods and services market are making decisions

Recall that when buyers in a goods and services market are making decisions

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Recall that when buyers in a goods and services market are making decisions, we can  model their decision-making behavior through a combination of their indifference curves  and their budget constraints. Since the decision to work or not to work is made in a  similar fashion, we can do the same thing for labor supply. Workers will try and  maximize their utility based on their preferences between having free time and having  money, and on their budget constraint (how much of each good: leisure or all other  goods, that they can afford).  How do we represent a budget constraint for leisure and all other goods (AOG)?  Typically, leisure is measured in one hour units, so that in one day, a worker can choose  to take up to 24 hours of leisure. All other goods (AOG) are measured by their dollar 
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

Recall that when buyers in a goods and services market are making decisions

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online