Answer to Question #312004 in Microeconomics for abhiyansh

Question

Draw the indifference curve for someone deciding how to allocate time between work and leisure. 

Answer 1

Indifference curve shows a combination of two goods, in this case, two activities having equal satisfaction and utility, which makes the consumer indifferent. Work is much more important than leisure. However, leisure is also significant for a person to concentrate on the work being done after having a relaxed mind. In drawing the indifference curve for work and leisure, the marginal rate of substitution ((MRS) must be determined. It is a straight line passing through the centre of origin with a positive. It shows the rate at which a worker is willing to trade income for leisure. Work comprises of the right side of the indifference curve, and it should consist of a major portion on the x-axis. However, the trade-offs between leisure and work should not be imbalanced.