Economics 3. Suppose that a worker has T hours per week of time that can be allocated to any combination of leisure (L) and market work (N = T?L). The worker’s preferences are described by the utility function: U(C, L) = C + αL where C is his consumption and α is a fixed parameter. The worker earns non-earned income Y N and an hourly wage w, so C = wN + Y N . 

 a. Please draw the worker’s budget line . Please label the slope of the budget line, the intercepts of the budget line, the horizontal and vertical axis carefully. (5 points)

b. Assume w α. Draw the worker’s budget line and indifference curves on a graph. Please the slope of the budget line, the intercepts of the budget line, the slope of the indifference curve, the horizontal and vertical axis carefully. How much leisure time would the worker choose? (5 points)

c. Assume w α. Draw

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Any geven data Suppose that a worker has Thacers per week of time any ... View the full answer