Joe won $365,000 a year for life in the state lottery. Use a labor-leisure choice analysis to answer the following:
a. Show how Joe’s lottery winnings affect the position of his budget line.
b. Joe’s utility function for goods per pay (Y) and hours of leisure per day (N) is U=Y+240N^0.5. After winning the lottery, does Joe continue to work the same number of hours each day? What is the income effect of Joe’s lottery gains on the amount of goods he buys per day?