Answer to Question #148758 in Microeconomics for Queen

Question

A utility maximizing worker has a budget line with a vertical intercept of 600 dollars and a horizontal intercept of 30 hours. How much non-labour income does this person earn?

Answer 1

Zero.

Because he will earn nothing if he does not work. All income comes from labour hours worked. The horizontal axis shows the hours of leisure. If he has zero hours of leisure, it means he works 30 hours. So his income is $600 and if he uses 30 hours as leisure and does not work then his income will be zero. So, non-labour income is zero.