Case Study

Labor-Leisure Decision Analysis

Consider two individuals, Maria and David, who both work 40 hours a week and value their leisure time. Maria inherits a trust fund that provides her with an extra $1,000 per month, regardless of how many hours she works. David receives a promotion that increases his hourly wage by an amount that also results in an extra $1,000 per month if he continues to work 40 hours. Analyze the likely change in the number of hours worked for both Maria and David. In your analysis, explain the economic principles that drive their respective decisions.

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Updated 2025-08-20

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