Question

a) Economic Theory regarding labor markets, suggests that work is a ‘bad’ and that leisure is a ‘good’. How is it that people choose to work more, choose more of a ‘bad’ thing on a regular basis. Are people stupid?

b) If people’s wants are never satisfied, then how is it that well paid athletes/entertainers seem to quit working very early in life? (Abstract away from injuries etc). How is it that these people can continue to live a life that they seem to want to live, without working as long as the rest of us? The best answers will use appropriate graphs.

c) From your discussion in parts ‘a’ and ‘b’, derive the supply curve for labor.

Answer 1