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1. In the leisure-income model, the wage constraint shows a. the points that maximize a worker’s...

1. In the leisure-income model, the wage constraint shows

a. the points that maximize a worker’s utility

b. all points that are equally preferred

c. the wage rates that affect work decisions

d. the available combinations of leisure and income

2. The slope of a wage constraint reflects the:

a. rate at which a person is willing to substitute leisure for income

b. price of leisure

c. income effect

d. substitution effect

3. When a worker maximizes her utility, then her _____ will be equal to her __________.

a. income ; wage times hours of leisure

b. marginal rate of substitution ; wage times APL

c. marginal rate of substitution ; wage

d. wage ; VMPL

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Answer #1

1. option D is correct - The available combinations of leisure and income.

2. option B is correct - price of leisure.

3. When a worker maximizes her utility, then her marginal rate of substitution will be equal to her wage.

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