Use the following to answer question:
Figure 13.7 
-(Figure 13.7)
a. Graph a budget constraint assuming a person has 24 hours that can be used for work or leisure at a wage rate of $20. Note the optimal consumption-leisure bundle.
b. Graph a budget constraint assuming a person has 24 hours that can be used for work or leisure at a wage rate of $30. Note the optimal consumption-leisure bundle.
c. Determine both the income and substitution effects on the graph.
Definitions:
Trade Deficits
An economic condition that occurs when a country imports more goods and services than it exports.
National Debt
The total amount of money that a country's government has borrowed, usually as a result of deficit spending.
Recession
A period of temporary economic decline during which trade and industrial activities are reduced, generally identified by a fall in GDP in successive quarters.
Business Form
The legal structure of a company, such as sole proprietorship, partnership, or corporation, which determines liability and tax obligations.
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