Exercise 3 Use a model for the household's trade-off between consumption and leisure to answer the following questions: a) Use a graph to show the household's optimal solution and then explain your answer in words. b) Suppose the household has not adapted optimally. Explain such a situation using a diagram and numbers that fit your example. How do you explain that it is not optimal? c) Discuss the statement:" Statistics show that some people work fewer hours when the real wage rises". Use a model for the labour market to answer the following question: d) Use graphs to show the difference between involuntary unemployment and voluntary unemployment and then explain your answer in words.

Exercise 3 Use a model for the household's trade-off between consumption and leisure to answer the following questions: a) Use a graph to show the household's optimal solution and then explain your answer in words. b) Suppose the household has not adapted optimally. Explain such a situation using a diagram and numbers that fit your example. How do you explain that it is not optimal? c) Discuss the statement:" Statistics show that some people work fewer hours when the real wage rises". Use a model for the labour market to answer the following question: d) Use graphs to show the difference between involuntary unemployment and voluntary unemployment and then explain your answer in words.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter1: Introducing The Economic Way Of Thinking

Section1.A: Applying Graphs To Economics

Problem 1SQP

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