Saima works as a free-lance worker at a software house in Rawalpindi. Suppose she keeps awake for 100 hours a week. Also suppose that part of this time she can spend on earning money doing this job and using it for her consumption, and the rest of the time she can spend on her leisure not earning money. At first she earns Rs.500 for every hour she works. Draw a figure showing Saima’s budget constraint, her indifference curve for consumption and leisure and her optimum. If per hour wage paid to her increases to Rs.600 for doing exactly the same work, draw figures to explain why she would increase her working hours or decrease her working hours.
Saima works as a free-lance worker at a software house in Rawalpindi. Suppose she keeps awake for 100 hours a week. Also suppose that part of this time she can spend on earning money doing this job and using it for her consumption, and the rest of the time she can spend on her leisure not earning money. At first she earns Rs.500 for every hour she works. Draw a figure showing Saima’s budget constraint, her indifference curve for consumption and leisure and her optimum. If per hour wage paid to her increases to Rs.600 for doing exactly the same work, draw figures to explain why she would increase her working hours or decrease her working hours.
Chapter10: Consumer Choice Theory
Section: Chapter Questions
Problem 6P
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Saima works as a free-lance worker at a software house in Rawalpindi. Suppose she keeps awake for 100 hours a week. Also suppose that part of this time she can spend on earning money doing this job and using it for her consumption, and the rest of the time she can spend on her leisure not earning money. At first she earns Rs.500 for every hour she works. Draw a figure showing Saima’s budget constraint, her indifference curve for consumption and leisure and her optimum.
If per hour wage paid to her increases to Rs.600 for doing exactly the same work, draw figures to explain why she would increase her working hours or decrease her working hours.
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