Answer to Question #100285 in Microeconomics for Lydia

Question

The following is a part of an article in “The Sports Economics”, October 2010.
Enjoying his best run of pitching in more than two years, the always-controversial
Carlos Zambrano said after winning his ninth game of the
season Wednesday that he will retire when his contract ends after the 2012 season.
Zambrano said:
“This will be my last contract. I won’t be playing anymore. I don’t want to play
anymore. Life is short. Sometimes you miss things with your family.I want to be there any moment for my daughter
and my family.
Who can criticize a man for wanting to spend more time with his family
after his contract runs out especially one as wealthy as Carlos Zambrano?
Zambrano’s decision in the above article can be explained by the “backward-bending labor
supply curve.”
a. By using the budget line, indifference curves, and consumers’ optimal con-
sumption behavior, graphically demonstrate Zambrano’s backward-bending labor supply
curve.

Answer 1

Backward-bending labour supply curve, is a graphical device showing a situation in which as real (inflation-corrected) wages increase beyond a certain level, people will substitute leisure (non-paid time) for paid worktime and so higher wages lead to a decrease in the labour supply and so less labour-time being offered for sale.

In this case Zambrano will choose such point of budget line and indifference curve intersection, at which he can get more leisure than worktime.