An individual's well-being is determined by the amount of time they spend on two activities: work and leisure. Currently, the additional well-being they would gain from one more hour of leisure is greater than the additional well-being they would gain from one more hour of work. If this individual decides to work one hour more and take one hour less of leisure, what will be the net effect on their overall well-being?
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Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.3 Doing the best you can: Scarcity, wellbeing, and working hours - The Economy 2.0 Microeconomics @ CORE Econ
Ch.5 The rules of the game: Who gets what and why - The Economy 2.0 Microeconomics @ CORE Econ
Analysis in Bloom's Taxonomy
Cognitive Psychology
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Slope of an Indifference Curve
An individual's satisfaction is determined by a function of two variables: hours of free time and units of consumption. Assume that having more of either variable always increases satisfaction. If this individual experiences a small decrease in their hours of free time, what change in consumption is necessary for their overall level of satisfaction to remain exactly the same?
Maintaining Utility with Changing Variables
For an individual whose satisfaction depends on free time and consumption (where more of each is preferred), the small increments formula implies that if they reduce their free time by one small unit, their overall satisfaction will remain constant as long as they also increase their consumption by exactly one small unit.
Balancing Study and Coffee
The total change in an individual's satisfaction from small adjustments to their consumption of two goods can be approximated by adding the 'satisfaction effect' of the change in the first good to the 'satisfaction effect' of the change in the second good. If the individual's overall satisfaction remains unchanged after these adjustments, what must be true about the two individual 'satisfaction effects'?
An individual's well-being is determined by the amount of time they spend on two activities: work and leisure. Currently, the additional well-being they would gain from one more hour of leisure is greater than the additional well-being they would gain from one more hour of work. If this individual decides to work one hour more and take one hour less of leisure, what will be the net effect on their overall well-being?
The Condition for Constant Satisfaction
An individual's satisfaction is derived from two goods: coffee (c) and donuts (d). Currently, the additional satisfaction they get from one more cup of coffee is 15 units, while the additional satisfaction from one more donut is 5 units. If this person gives up one cup of coffee and receives three donuts in exchange, what is the approximate net change in their total satisfaction?
According to the principle of small increments, if an individual's consumption of two goods changes in such a way that their overall level of satisfaction remains constant, the gain in satisfaction from the increase in one good must be ______ by the loss in satisfaction from the decrease in the other good.
Evaluating a Proposed Exchange
Balancing Study and Coffee