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Analyzing a Consultant's Work-Leisure Choice
Alex, a freelance consultant, currently works 40 hours per week and earns $100 per hour. At this level of work, Alex feels that an extra hour of free time would be worth giving up $150 in income. Analyze Alex's current work-leisure balance. Is Alex maximizing their satisfaction? Explain your reasoning and recommend a specific change to Alex's work hours, if any.
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CORE Econ
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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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A farmer is currently working 8 hours a day, which produces 10 bushels of grain and leaves 16 hours of free time. At this level of work, the farmer finds that working one additional hour would produce 1.5 extra bushels of grain. However, based on personal preference for leisure, the farmer would be willing to give up 2 bushels of grain to have one more hour of free time. To maximize personal satisfaction, what should the farmer do?
An individual is currently at a point where the amount of a good they must forgo to gain an additional hour of leisure is 4 units. Their personal preference is such that they would be willing to forgo up to 6 units of the good for that same additional hour of leisure. To increase their overall satisfaction, this individual should work more hours.
Decision-Making for a Freelance Designer
Optimizing Study and Leisure Time
Analyzing a Consultant's Work-Leisure Choice
A student is deciding how to allocate their time between studying (which improves their final grade) and leisure. For each scenario below, match the relationship between the student's trade-offs with the action that would increase their overall satisfaction.
A consultant is deciding on their work-life balance. They find that at their current workload, the opportunity cost of one more hour of free time is a loss of $150 in billing. Their personal valuation of that extra hour of free time is $200. Because the amount they are willing to give up ($200) is greater than the amount they must give up ($150), they have an incentive to work ____ hours.
A freelance writer currently works 9 hours a day, earning $450. They calculate that working one hour less would reduce their earnings by $50. However, when considering their personal preference for leisure, they feel that an extra hour of free time is worth as much as $70 to them. Arrange the following steps in the logical order of the decision-making process the writer should follow to improve their overall satisfaction.
If an individual finds that the personal value they place on an additional hour of free time is greater than the amount of goods they would have to sacrifice to get that hour, they have already achieved their highest possible level of satisfaction from their allocation of time.
Consider a student's choice between hours of free time (on the horizontal axis) and their final grade (on the vertical axis). The diagram provided shows the student's feasible frontier and an indifference curve that intersects the frontier at point A. At point A, the slope of the indifference curve is steeper than the slope of the feasible frontier. Which of the following actions would lead the student to a higher level of overall satisfaction?
Optimizing Study and Leisure Time