Assume that the agents need to choose between leisure and
consumption. “Awake” hours not dedicated to leisure are dedicated
to work for which the agent gets w. Also, unless indicated
otherwise, assume that the total “awake” hours are 110 per
week.Radamel has an investment for which he receives $200 weekly.
His wage is $50 per hour.
1. Draw Radamel’s budget constraint
2. Radamel got injured and had to switch jobs. He now earns $30
per hour. Draw Radamel’s new budget constraint.
3.Due to his injury and the
subsequent demotion, Radamel developed a test for gambling.
Unfortunately, he gambled away his investment. He no longer
receives his weekly allowance of $200. Draw Radamel’s new budget