Question

A worker is indifferent between job one lasting 4 hours a day, job two lasting 8 hours a day, and job three lasting 12 hours a day. Job two pays $10 an hour and tangency between the indifference curve and the budget constant occurs at 8 hours. One can conclude that

a. job one pays less per day but more per hour.
b. job three pays more per day and more per hour.
c. both A and B are true
d. neither A nor B are true

Answer 1

Answer:

both (a) and (b) are true

That is:

a. job one pays less per day but more per hour.

b. job three pays more per day and more per hour.

Explanation:

An indifference curve is one that shows all combinations of a good or activity that gives the same level of satisfaction to the consumer, and so the consumer is indifferent.

In this instance the worker is indifferent between job one lasting 4 hours a day, job two lasting 8 hours a day (pays $10 an hour), and job three lasting 12 hours a day.

For the worker to be indifferent job one must pay more per hour and less per day. Whole job 3 wi pay more per day and more per hour.