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case, we were considering two goods. Now, the single mother is considering
one good (food consumption) and one bad (labor, since we assume she
would rather be at home than at work). The trick to modeling this decision is
to model the demand for leisure, the good that is the counterpart of labor.That
way, we can model the trade-off between two goods using our existing tools
and then compute the amount of labor supplied as total work hours minus
hours of leisure.
FIGURE 2-8
Food
consumption The Consumption-Leisure Trade-off
(dollars) Joelle has a choice of taking more leisure
A
$20,000 and consuming less, or taking less leisure
(working harder) and consuming more. If
she takes no leisure, she can have con-
Slope = 10 sumption of $20,000 per year; but if she
takes 2,000 hours of leisure, her consump-
tion falls to 0. This is represented by the
B budget constraint with a slope of 10, the
Budget constraint relative price of leisure in terms of food
consumption.
C
0 2,000 Leisure (hours)