Limited access

Upgrade to access all content for this subject

Daphne must choose to allocate her time between working (which provides money that she can spend on consumption) and leisure (which she enjoys for its own sake). She has $T$ hours per day to spend either working or participating in leisure. Consider the graph below, which depicts her indifference curves at three different levels of utility:

The straight red line is tangent to the $U1$ indifference curve at the point with $0$ consumption and $T$ hours of leisure. In other words, this particular budget constraint has a slope just low enough that Daphne decides not to work at all. If the slope were any steeper, Daphne would decide to work at least a little bit.

Select an assignment template