4.2. Budget constraint. Definition: combinations of real income-leisure that the i can achieve Characteristics: Line “price takers” Slope = wage rate (w) Maximization of U:
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The reasoning behind “backward-bending”: with ∆w ∆BC substitution > income; but as t goes by, ∆w ∆BC substitution < income
Supply curve: when leisure is abundant, how is the MRS?
Different individual curves: men vs. women?