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3.6 The indifference curves in the figure below illustrate Alice's preferences over weekly leisure I and weekly consump tion c. Alice has 110 hours each week to allocate between work and leisure activities. If Alice works, she has no nonlabor income, but she earns $10 per hour. (The price of consumption is $1 per unit.) If she doesn't work, she re- ceives government aid in the form of a $300 weekly cash grant consumption (units/wook) 700 600 500 400 300 200 100 0 10 20 30 40 50 60 70 80 90 leisure hours/wook) (a) Indicate the point in the figure that's Alice's endowment point with the $300 cash grant. (b) Which indifference curve do we use to determine Alice's reservation wage? (c) Draw a line from point A that's tangent to the indifference curve from your answer to the previous question (d) Draw Alice's budget line in the figure. Illustrate all the pairs of leisure and consumption that are in Alice's How is Alice's reservation wage related to this tangent line? budget set. Does Alice work? Use the budget line and tangent line to explain why she works or doesn't work. (e)
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3.6 The indifference curves in the figure below illustrate Alice's preferences over weekly leisure I and weekly consump tion c. Alice has 110 hours each week to allocate between work and leisure activities. If Alice works, she has no nonlabor income, but she earns $10 per hour. (The price of consumption is $1 per unit.) If she doesn't work, she re- ceives government aid in the form of a $300 weekly cash grant consumption (units/wook) 700 600 500 400 300 200 100 0 10 20 30 40 50 60 70 80 90 leisure hours/wook) (a) Indicate the point in the figure that's Alice's endowment point with the $300 cash grant. (b) Which indifference curve do we use to determine Alice's reservation wage? (c) Draw a line from point A that's tangent to the indifference curve from your answer to the previous question (d) Draw Alice's budget line in the figure. Illustrate all the pairs of leisure and consumption that are in Alice's How is Alice's reservation wage related to this tangent line? budget set. Does Alice work? Use the budget line and tangent line to explain why she works or doesn't work. (e)​

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