Answer to Question #101955 in Macroeconomics for Richad Cliff

Question

Fatima, a college professor, derives satisfaction from her teaching performance (T) and her research output (R). Suppose that she can work up to 60 hours per week. Every hour spent on preparing the lecture notes improves T by 1 unit whereas every hour spent in the lab improves R by 2 units.

(a) Draw Fatima’s budget set in the T-R space.
(b) Suppose that the college has acquired new lab equipment worth £1000 that increases Fatima’s research productivity to 3 units per hour. Redraw her budget set.
(c) Consider the original scenario (no equipment). Now suppose that Fatima gets a grant for £1000. She could use it to buy the above-mentioned equipment or she could hire a teaching assistant who would improve her teaching productivity up to 1.5 units per hour. Redraw her budget set.
(d) If the lab is not open for more than 40 hours per week, re-draw Fatima’s budget set in part (a) above.

Answer 1

$$a). T= number hours*1$$

$R=No. of minutes*2$

T 10 20 30 40 50 60

R 20 40 60 80 100 120

T

B).$T=No. of hours*1 T=no. of hours*3$

T 10 20 30 40 50 60

R 30 60 90 120 150 180

T

c_).$T=No of hours*1.5$

$R=No of hours*2$

T 15 30 45 60 75 90

R 20 40 60 80 120 150

T

D)$T=No of hours *1$

$R = no of hours *2$

T 10 20 30 40 50 60

R 20 40 60 80 100 120

T