Answer to Question #68570 in Macroeconomics for cindy

Question

Suppose you have two part time jobs, babysitting and pizza delivery. After younger babysitters start working for less, babysitting clients only pay $8 instead of $10 per hour. What happens to your supply of hours for delivering pizzas? explain.

Answer 1

The supply of hours for delivering pizzas will increase. With reduced price for an hour of babysitting, quantity supplied of this type of activity will decline. Consequently, the supply of working hours for delivering pizzas will shift rightward because now you are more willing to do this type of work as it provides greater utility. Thus, for babysitting opportunity cost will increase and you will try to substitute it with pizzas delivering.