19.

Jo, a college professor, derives satisfaction from her teaching

performance (T) and her research

output (R). Suppose that she can

work up to 60 hours per week.

Every hour spent on preparing

the lecture notes improves T by 1 unit whereas every hour spent

in the lab improves R by 2 units.

(a)

Draw Jo's budget set in the TR space.

(b)

Suppose that the college has acquired new lab equipment worth

1000 that increases Jo's

research productivity to 3 units per hour. Redraw her budget set.

(c)

Consider the original scenario (

no equipment). Now suppose that Jo gets a grant for 1000.

She could use it to buy the abovementioned equipment or she could hire a teaching

assistant who would improve her teaching productivity up to 1.5

units per hour. Redraw her

budget set.

(d)

If the lab is not open for more than 40 hours per week, redraw

Jo's budget set in part (a)

above.