Homework Answers
A) Budget line will be Kinked
W = 20, T = 168, L is Leisure
h = T-L : work hours
So, even if L = 168, ( no work is done), C = 100
C = 20*(168-L) +100
Kink at (C,L) = (100,168)
Vertical Intercept = 20*168+100 = 3460
__________
B) w'= 30, Budget line gets steeper , rotates outwards around the Kink point
New vertical Intercept = 30*168+100 = 5140
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