Consider Justin who makes $1,400 per week and just won a ‘set for life’ lottery ticket which involves a fortnightly payment of $10,000 for 20 years. Currently he works 35 hours per week. Now do the following: • Illustrate the effect of the lottery win on Justins budget constraint using a fully labelled diagram where i) the horizontal axis represents the hours of free time per week, and ii) the vertical axis represents Justins weekly consumption. • Illustrate on the same diagram Justins optimal decisions before and after the lottery win along with his indifference curves. • Based on your diagram, discuss whether Justin will quit his job.

Consider Justin who makes $1,400 per week and just won a ‘set for life’ lottery ticket which involves a fortnightly payment of $10,000 for 20 years. Currently he works 35 hours per week. Now do the following: • Illustrate the effect of the lottery win on Justins budget constraint using a fully labelled diagram where i) the horizontal axis represents the hours of free time per week, and ii) the vertical axis represents Justins weekly consumption. • Illustrate on the same diagram Justins optimal decisions before and after the lottery win along with his indifference curves. • Based on your diagram, discuss whether Justin will quit his job.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section6.A: Indifference Curve Analysis

Problem 2SQP

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