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Mel can choose to work or enjoy leisure for a total of 14 hours per day. She is considering offers from two firms. Firm A
Mel can choose to work or enjoy leisure for a total of 14 hours per day. She is considering offers from two firms. Firm A pays $12 per hour, and for this job her tradeoff between income (x2) and leisure (x1) is given by the indifference curve x2 = U (x 1)^2 for any given utility level U. The second job pays more at $20 per hour, but the work is less enjoyable and her indifference curve is x2 =U 2x1 (x 1)^2 . Assume Mel has no income other than her wage.
- If she was working for Firm A, what would be her optimal number of hours to work?
- If she was working for Firm B, what would be her optimal number of hours to work?
- If she could work her optimal number of hours in either job, which would she prefer?
- If she had to work exactly 7 hours at either of the jobs, which would she prefer?
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