Exercise 5

You are willing to work up to 80 hours a week. You make $10(B + 1) an

hour, where B is 9

1. Define the budget set equation and graph your budget set in terms of leisure (equal to nonworked

hours) as good 1 and money spent on every other good as good 2.

2. Assume that above 40 hours per week you get an overtime hourly rate of

$16(B + 1) per hour. Define the budget set equation and graph the new budget set.

3. Assume that in addition to the over-time rate you also have $200(B + 1) in

your checking account. Define the budget set equation graph the new budget set.