Assume that Angela's feasible frontier for the production of grain on her farm is given by

= 16h

where h is the number of hours worked and h = 24 - t , where t is the amount of free-time Angela takes in a day. Assume further, that Angela's utility relationship can be represented by the following linear relationship

= 2 +

Plot out Angela's feasible frontier and a selection of indifference curves [2 marks]

Calculate the optimal amount of free time and grain Angela will choose. Show all calculations [4

marks]

The government now imposes a tax of 5 bundles of grain on Angela. Calculate the optimal

amount of free time and grain Angela will produce and consume. Compare your results with

answer (b) and explain. [2 marks]

Now assume that Bruno owns the farm, and has take-it-or-leave-it power. What is the maximum

rent he could charge Angela? [4 marks]