Raoul has no non-labour income and 80 hours a week that he can allocate between leisure and

Fantastic news! We've Found the answer you've been seeking!

Question:

Raoul has no non-labour income and 80 hours a week that he can allocate between leisure and labour. Answer the following:

(a) Raoul has two job opportunities. He can work as a janitor for twenty hours a week for $200 a week or he can work as a financial advisor for 55 hours for $3000 a week. He can also moonlight and work both jobs or not work at all. Sketch his budget set.

(b) With the addition of an indifference curve, illustrate the case where Raoul chooses to work 55 hours a week as a financial advisor.

(c) The firm that offers Raoul employment as a janitor offers to allow him to choose his hours, for an hourly wage of $10. He also retains the option of working as a financial advisor as in part (c). Sketch Raoul’s new budget set.

(d) Add an indifference curve that illustrates the situation where Raoul retains his employment as a financial advisor and also moonlights as a janitor for 10 hours a week. Is Raoul better or worse off than he was in part (b)? Explain