Jack is a representative consumer in country A consuming only two goods: consumption goods, denoted by C (numeraire), and leisure, denoted by R. Jack is happy with any combination of C and R as long as U(C, R)=14R+C. They earn an hourly wage rate of $w, do not pay any taxes and do not earn any non-wage income. Show with relevant diagrams that the consumption bundle Jack chooses depends on whether w is greater than or less than 14. Explain your results.

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Figure1 in the attached document below illustrates the effects of changes in hourly wage rate or w and the resultant modifications of the equilibrium choices of numeraireC and leisureR given the budge... View the full answer