1.6. 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. Assume that all hours not spent working are leisure hours. The price of a good is equal to $1 and the price of leisure is equal to the hourly wage. We observe the following information about the choices that the two individuals make:

Graphically illustrate Sam’s leisure demand curve and Barb’s leisure demand curve. Place price on the vertical axis and leisure on the horizontal axis. Given that they both maximize utility, how can you explain the difference in their leisure demand curves?

Transcribed Image Text:

Sam Price of G Price of L L (hours) L (hours) Barb Sam Barb G ($) G ($) 1 8 16 14 64 80 1 9 15 14 81 90 1 10 14 15 100 90 1 11 14 16 110 88