Answer to Question #304980 in Microeconomics for Zareen Khan

Question

Draw the indifference curve for someone deciding how to allocate time between work and leisure. What will be the shape of labour supply curve?

Answer 1

When a person spends much of their time at work in order to increase their consumption, they will get less time for leisure. The shape of the labor supply curve is, therefore, a downward sloping curve that is convex to the origin. In the case of a wage increase, it will have both an income effect and a substitution effect.