question on comsumer theory?
Suppose that a person wants to consume only two goods: pizza and leisure (watching tv).She wants to consume precisely one slice of pizza for every hour that she spends in front of the TV. The only way to get money to buy pizza is to work, that is to give up leisure. Namely, if she spends L hours in front of the TV, then she works (24 − L) hours. The wage is w.
(a) Write a formula for budget constraint (let Y be the number of slices of pizza that she consumes, let price of one slice be one)
(For this part i got the answer which is B=1*Y+w*L)
(b) Given the information on her preferences, find her optimal choice
(Hint: the tangency condition is useless here)
(I can't draw an indifference curve since the two goods are mutually consumed in exactly the same amounts. And how do we obtain an indifference curve by the way?)
- megLv 71 decade agoFavorite Answer
Write the price of pizza as a time hrs=w/1 and let B=24 hours
her preferences indicate that w(24-L)=L no sleep??
her indifference curve is L shaped, that is no extra utility is gotten for extra leisure or extra pizza.