December 2, 2015

Homework Help: Please look! Econ. question

Posted by tofu on Monday, February 5, 2007 at 4:06pm.

Suppose the preferences of the individual change in such a way that the individual requires now to be compensated to forgo one hour of leisure and be as satisfied as before..

im not sure what this means!! does it mean, the worker wants to give up one hr of leisure to gain one hr of consumption because he has a lot of leisure?? so will new indifference curve be flatter or steeper?

Thank you for using the Jiskha Homework Help Forum. Let's say you now have 10 leisure hours. Someone wants you to give up 1 of those hours, so you only have 9. It is not the worker who wants to give up that hour but if the company pays him for that time, he is willing. In other words, less leisure time means more money. Some people would prefer that while others would not.


would the indifference curve be steeper or flatter? and would the optimal choice be near the right?

I guess I dont understand what is being changed. Was it the case the person was indifferent between working and leisure, and with the change now expects to be paid for working? The initial case seems implausable. Or is it the case the person wants MORE compensation to give up an hour of leisure.

That said, put leisure on the y-axis, work on the x-axis. The indifference curve would then be flatter than before. He will, likely, take more leisure than before.


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