Suppose a typical income leisure constraint. The wage rate for atypical consumer is $20 per
hour, and she works 10 hours per day. Assume there are 52 weeksper year.
a. Construct a yearly income-leisure constraint for thisconsumer. Graphically show the optimal
work-leisure choice for this consumer.
b. Assume that the wage rate is increased to $25 per hour.Assuming income effect dominates,
graphically show a new possible work-leisure choice for thisconsumer.
c. Suppose that the government considers an income supplementprogram for this consumer
providing $5000 per year. Assuming holding all of theassumptions given in #b, is it a good
policy for the economy in general for this society? Explain itwith the relevant economic
theoretical justifications.
