Question

1. Suppose that a person produces their own consumption good, G, using a production function G=3L, where L is the amount of labor time used. The person has 24 units of labor time available to them. Free time, denoted F, is the amount of time not used for labor.
   
   1. Compute the average product of labor and show that it is constant.
   2. Draw the set of feasible combinations of G and F, with F on the horizontal axis.
   3. Compute the MRT in this situation, and find the opportunity cost of free time in terms of G.
   4. What is the value of the person’s MRS at their most preferred attainable combination of G and F?

Illustrate the most preferred attainable combination of G and F on a diagram that shows the feasible set and an indifference curve.

Answer 1