DrJ Has 80 Hours Per Week to Divide Between Work

question 17

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 $150 per week of his labor income is untaxed, but all labor income above $150 is taxed at a rate of 70%.

• A)Dr.J's budget line has a kink where his income is $400 and his leisure is 50 hours.
• B)The slope of Dr.J's budget line is everywhere -1.50.
• C)Dr.J's budget line has a kink in it at the point where he takes 60 units of leisure.
• D)Dr.J's budget line has no kinks in the part of it that corresponds to a positive labor supply.
• E)Dr.J's budget line has a piece that is a horizontal straight line.

---

Definitions:

Confess

To admit or acknowledge something reluctantly, often about a wrongdoing or mistake.

Optimization Strategy

A plan or method aimed at making the best or most effective use of resources within defined constraints to achieve a set goal.

Growth Related Profit

Profit that results from expansion in business size, output, or market share, indicative of a company’s growth.

Market Share

The proportion of total sales in a market captured by a particular company or product.