Indifference curves for consumption and leisure
Imagine an individual with indifference curves for consumption and leisure that are concave to the origin, rather than convex to the origin.
a) In words, what would this mean about the individual's "value" of leisure as he reduced his hours worked?
b) Would such a person spend all of his available time working, some of it, or none of it? Show on a graph.
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Solution Preview
See the attached file for diagram.
a. This implies (against the decreasing marginal utility usual assumption) that the value of leisure increases as the the working hours are reduced. In other words, an individual with such indifference curves would value ...
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