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An architect works 35 hours a week and earns $100 per hour. They are considering reducing their workweek by one hour. They calculate that the happiness gained from that extra hour of free time is equivalent to the satisfaction they would get from $120 worth of goods and services. Based on this information, what are the architect's Marginal Rate of Substitution (MRS) between leisure and consumption, and their Marginal Rate of Transformation (MRT)?
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Ch.3 Doing the best you can: Scarcity, wellbeing, and working hours - The Economy 2.0 Microeconomics @ CORE Econ
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An architect works 35 hours a week and earns $100 per hour. They are considering reducing their workweek by one hour. They calculate that the happiness gained from that extra hour of free time is equivalent to the satisfaction they would get from $120 worth of goods and services. Based on this information, what are the architect's Marginal Rate of Substitution (MRS) between leisure and consumption, and their Marginal Rate of Transformation (MRT)?
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