Jill has 16 hours of waking time per day. She earns $30/day from unearned sources. This includes a scholarship she has from CU Denver and dividends from her stock account. She has little work experience and earns $12/hour while working. She is currently working 6 hours per day.

1) Draw the labor supply model to represent Jill's current situation.

For each of the following, assume that Jill can choose the exact amount of hours that she works.

2) Jill inherits a big sum of money and now her unearned income is $100. How do you expect this to affect her hours worked? Explain using concepts from the learning unit. [Assume she can choose the exact amount of hours she works]

3) Go back to the original situation of $30/day of unearned income and working 6 hours per day. If Jill's wage rises from $12 to $16 an hour draw her new budget constraint. [no need to draw the indifference curve]

4) In #3, what will happen to the number of hours she works? Can you tell for sure? Why or why not? Explain using concepts from the learning unit. [assume she can choose the number of hours to work]