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Using the budget constraint, PC=W[T-l], where C is consumption and l is leisure and T is...

Using the budget constraint, PC=W[T-l], where C is consumption and l is leisure and T is total time, show that a cultural constraint or government requirement to work 8 hours per day will tend to make total satisfaction in society lower than it could be if there is no restriction on the number of hours a worker chooses to work.

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Answer #1

T = working hour + leisure (L)

Working hour = T - L

Budget constraint C = w(T -L) ; where w = wage rate

Total satisfaction after fixing the working hour at 8 hours will reduce if the willingness to work of the workers were free to choose their working hours at the given wage rate. They definitely optimise their utility by choosing less work and more leisure as this have no effect on their wage before regulations.

In the figure, the vertical straight line represents 8 hours of work and L2T is the hours of leisure consumed. Initially, IC1 represents the utility level of the workers. However, government fixed 8 hours of work, the working hours of the workers has incraesed and leisure time has been reduced. Therefore, the consumer with the given budget constraint is now on the lower IC, IC2.

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