Two individuals, Sam and Barb, derive utility from the hours of leisure (L) they consumeand from the amount of goods (G) they consume. In order to maximize utility, they needto allocate the 24 hours in the day between leisure hours and work hours. The price of agood is equal to $1.00 and the price of leisure is equal to the hourly wage. We observethe following information about the choices that the two individuals make:Q16-14-12-SamBarbSamBarbPrice of Price10-LLof L (hours) (hours) G ($)G ($)G8-713107798113211110121541157142551506-Graphically, illustrate Sam's leisure demand curve and Barb's leisure demand curve.4-1.) Using the line drawing tool, draw Sam's leisure demand curve. Label this line D'2-2) Using the line drawing tool, draw Barb's leisure demand curve. Label this line D'0-04в8101214Leisure (hours)Carefully follow the instructions above, and only draw the required objects.Wage (S)

Question
Asked Oct 24, 2019
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Two individuals, Sam and Barb, derive utility from the hours of leisure (L) they consume
and from the amount of goods (G) they consume. In order to maximize utility, they need
to allocate the 24 hours in the day between leisure hours and work hours. The price of a
good is equal to $1.00 and the price of leisure is equal to the hourly wage. We observe
the following information about the choices that the two individuals make:
Q
16-
14-
12-
Sam
Barb
Sam
Barb
Price of Price
10-
L
L
of L (hours) (hours) G ($)
G ($)
G
8-
7
13
10
77
98
1
132
1
11
10
12
154
1
15
7
14
255
150
6-
Graphically, illustrate Sam's leisure demand curve and Barb's leisure demand curve.
4-
1.) Using the line drawing tool, draw Sam's leisure demand curve. Label this line D'
2-
2) Using the line drawing tool, draw Barb's leisure demand curve. Label this line D'
0-
0
4
в
8
10
12
14
Leisure (hours)
Carefully follow the instructions above, and only draw the required objects.
Wage (S)
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Two individuals, Sam and Barb, derive utility from the hours of leisure (L) they consume and from the amount of goods (G) they consume. In order to maximize utility, they need to allocate the 24 hours in the day between leisure hours and work hours. The price of a good is equal to $1.00 and the price of leisure is equal to the hourly wage. We observe the following information about the choices that the two individuals make: Q 16- 14- 12- Sam Barb Sam Barb Price of Price 10- L L of L (hours) (hours) G ($) G ($) G 8- 7 13 10 77 98 1 132 1 11 10 12 154 1 15 7 14 255 150 6- Graphically, illustrate Sam's leisure demand curve and Barb's leisure demand curve. 4- 1.) Using the line drawing tool, draw Sam's leisure demand curve. Label this line D' 2- 2) Using the line drawing tool, draw Barb's leisure demand curve. Label this line D' 0- 0 4 в 8 10 12 14 Leisure (hours) Carefully follow the instructions above, and only draw the required objects. Wage (S)

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Expert Answer

Step 1

To determine how there can be fewer leisure activities spend would be associated with the more hours spent working. In her, Sam’s leisure demand curve is downward sloping. It shows if the price of leisure (the wage) would rise, it would be directly inversely proportional to the per hour wage rate of consuming less leisure. It is also important to note, how one can spend appropriately what respect to the working that can note how there would be a potential higher wages that could equally be able to buy more goods. For the other individual Barb’s leisure demand curve is shown as upward sloping. For this, as the price of leisure would rise, it would create a per hour relation to work less and have low leisure (and work less) along with having a significant working hour that would equally be generating more income per hour. As noted below in the leisure demand curve.

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Price Leisure Demand for Sam Price Leisure Demand for Barb 150 250 132 150- 77 98- Leisure 13 14 Leisure 12 10

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Step 2

It is also defined as the difference in demand that can help to access the situation and denote how the income and substitution effects can notably be noted concerning the two individuals. For the substitution effect one also has to measure a respective change in the price of leisure that would be appropriate to keep concerning the utility constant (in here the budget line would also take a progressive current indifference curve). To have the analysis of the substitution effect one has to determine the negative, signifies how there can be a rise in the price that could relate to ...

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