Suppose that increases because households have developed a greater preference for leisure relative to consumption. Construct...

 

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Suppose that increases because households have developed a greater preference for leisure relative to consumption. Construct a pair of well-labeled diagrams of equilibrium in the factor markets to show how the change in affects the supply of capital, the supply of labor, the real wage, and the real rental rate. Suppose that increases because households have developed a greater preference for leisure relative to consumption. Construct a pair of well-labeled diagrams of equilibrium in the factor markets to show how the change in affects the supply of capital, the supply of labor, the real wage, and the real rental rate.