DrJ Has 80 Hours Per Week to Divide Between Work

question 8

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 $250 per week.Suppose that the first $50 per week of his labor income is untaxed, but all labor income above $50 is taxed at a rate of 10%.

• A)The slope of Dr.J's budget line is everywhere -4.50.
• B)Dr.J's budget line has a kink where his income is $300 and his leisure is 70 hours.
• C)Dr.J's budget line has no kinks in the part of it that corresponds to a positive labor supply.
• D)Dr.J's budget line has a kink in it at the point where he takes 80 units of leisure.
• E)Dr.J's budget line has a piece that is a horizontal straight line.

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Definitions:

Formalize

To make or declare something official, structured, or conform to established rules or norms.

Commitment

The state or quality of being dedicated to a cause, activity, or relationship, often manifesting as a willingness to give time and energy to something believed in.

Premarital Cohabitation

The practice of living together as a couple in a long-term relationship without being married.

Convenient

Describes something arranged or existing for ease and comfort or located in a way that makes it easy to reach.