Dr J Has 80 Hours Per Week to Divide Between

question 12

Multiple Choice

Dr. J has 80 hours per week to divide between work and leisure. His wage rate if $5 per hour. Dr. J receives a lump sum payment of $150 per week. Suppose that the first $100 per week of his labor income is untaxed, but all labor income above $100 is taxed at a rate of 70%.

• A) Dr. J's budget line has a kink where his income is $250 and his leisure is 60 hours.
• B) Dr. J's budget line has no kinks in the part of it that corresponds to a positive labor supply.
• C) The slope of Dr. J's budget line is everywhere -1.50.
• D) Dr. J's budget line has a kink in it at the point where he takes 70 units of leisure.
• E) Dr. J's budget line has a piece that is a horizontal straight line.

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Definitions:

Familiar

Commonly recognized or easily understood due to being frequently encountered or extensively experienced.

Intuitive Thinker

An individual who prefers to rely on intuition and subjective understanding to make decisions and solve problems.

Crisis Situations

Emergency circumstances that require immediate action due to the potential threat to health, safety, or stability.

Flexible Approach

A method or strategy that is adaptable and can be adjusted according to changes in circumstance or new information.