Suppose Madison has 16 hours in the day for work or leisure. She earns $5 an hour and receives $15 each day in non-labor income.
Draw her labor-leisure constraint. Also, suppose Madison maximizes her utility by working 8 hours a day. Solve for the amount of leisure consumed and the amount of income earned. Indicate these equilibrium values in your graph.
Illustration of a labor-leisure constraint with a calculation of an equilibrium value for income.