Endowments, Labor Supply, and Backward Bending

Budgets through the endowment

A neutral benchmark

Backward bending with subsistence

The policy surface

A worker has 24 hours, no other income, wage w, consumption price 1. What is the budget?

For u equal to C L with the endowment budget, leisure stays at 12 for every wage. Why?

In the subsistence example, why does labor fall from 18 to 16.6 when the wage rises from 10 to 13?

Why can overtime premiums raise hours even when a base-wage rise would lower them?

For u equal to (C minus 120) times L with the endowment budget, compute leisure L at w equals 10, and write the number.

Same worker, compute leisure at w equals 15, and write the number rounded to one decimal.

For u of (C minus 120) times L, leisure L equals 12 minus 60 over w. What is leisure at wage 13, to one decimal?

For u equal to C times L with 24 hours and price 1, what happens when the wage doubles from 10 to 20?

For the subsistence worker, L equals 12 minus 60 over w. What happens as the wage rises to 60 and beyond?

With 24 hours, wage 10, consumption price 1 and no other income, what are the budget's intercepts?

For u of (C minus 120) times L, compute labor hours at w of 10, and write the number.

Same subsistence worker, compute leisure L at w of 20, and write the number.