ECON 3100 Final Exam Questions with Correct Answers

A single indifference curve in the individual choice model of labor supply shows: Correct Answer-the tradeoff between income and non-market time for a given level of utility. Sally is indifferent between (1) working 8 hours a day and earning $160 a day and (2) working 9 hours a day and earning $200 a day. This implies that: Correct Answer-When Sally makes $160 in an 8 hour job, she puts a $40 value on the non-market time foregone to work a 9th hour. In the individual choice model of labor supply the budget constraint represents Correct Answer-The amounts of time and money income available to a person. The slope of the budget constraint is equal to Correct Answer-The wage rate The steeper a person's indifference curve in the individual labor supply choice model represents: Correct Answer-the higher the value they place on an extra unit of non-market time. At the utility-maximizing number of hours worked Correct Answer-the individual's marginal rate of substitution between income and non-market time is exactly e