What is the reservation wage? ?Other things being equal, one?s reservation wage increases as larger amounts of nonlabor income are realized.? Do you agree? Explain. Redraw the indifference curves of Figure 2.8 to demonstrate that anything that lowers (raises) the value of nonmarket time will increase (reduce) the probability of labor force participation.

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W' н 4 10 12 14 16 18 20 22 24 Hours of leisure (per day) 24 22 20 18 16 14 12 10 4 2 0 Hours of work (per day) Income (per day)