Answer to Question #296620 in Microeconomics for LALA

Question

A worker's total earnings for one day is $100. He received a $20 fixed payment and consumes 14 hours of leisure. What is the hourly wage rate? Show solutions.

Answer 1

Let $E$ be the worker's earnings, $c$ be the fixed pay and $L$ be the time consumed for leisure. Also, let $k$ be the hourly wage. The relationship between earnings and leisure is given by the equation, $E=c+k(24-L)....(i)$.

We are given that, $E=100, c=20,L=14$ and we can write the equation $(i)$ as, $100=20+k(24-14)$. Which we can also write as, $100=20+10k......(ii)$. To determine the hourly wage rate, we solve for $k$ in equation $(ii)$ above.

So,

$100-20=10k\implies 80=10k\implies k=8$

Therefore, the hourly wage rate $k=\$8$.