Labour-Leisure choice:
a. Suppose that you can work up to 365 days per year and can earn $200 per day for each day you work. Draw a budget line with respect to your labour-leisure choice. What is the slope of the budget line?
b. Suppose that you choose to work 200 days per year. Draw the appropriate indifference curve, and note your equilibrium wage income and labour-leisure choices.
c. Suppose that you are sick ten days per year. Draw the impact of the illness on the equilibrium level in 3b. How will it change your equilibrium allocation of earnings and labour versus leisure?
d. Suppose that you are not sick. Further suppose that your wage rises from $200 to $210 per day. Show how your equilibrium level of income and labour-leisure will change from your answer in 3b.