d) Now assume that you receive an income of £140 per week from an unknown benefactor. Show the impact on your feasible set (nb: be more careful than Stephen was in his diagrams in Autumn Week 5!), and show a new optimal choice in which consumption increases but labour supply decreases. Using the concept of the marginal rate of substitution, explain why this is a likely outcome.
d) Now assume that you receive an income of £140 per week from an unknown benefactor. Show the impact on your feasible set (nb: be more careful than Stephen was in his diagrams in Autumn Week 5!), and show a new optimal choice in which consumption increases but labour supply decreases. Using the concept of the marginal rate of substitution, explain why this is a likely outcome.
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Theory Of Consumer Choice
Section: Chapter Questions
Problem 1PA
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Please help me to solve question 6 d.
I am having a little bit of trouble understanding it.
Thank you
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