# A person can work up to 100 hours per week at 25 dollars per hour. (a) Graph her budget constraint (consumption and leisure on the axis).

A person can work up to 100 hours per week at 25 dollars per hour.

(a) Graph her budget constraint (consumption and leisure on the axis).

(b) Suppose that we want to improve her economic conditions with an income guarantee of 300 dollars Graph her new budget constraint.

Suppose Helen receives an endowment of 100 dollars in the first period, and 50 dollars in the second period. The interest rate is 10 percent.

(a) Write down the life time budget constraint.

(b) Graph her life time budget constraint (consumption in period 1 on the x-axis and consumption in period 2 on the y-axis).

(c) Write down the life time budget constraint if she receives 50 dollars in the first period and 100 dollars in the second period.

(d) Graph her new life time budget constraint (consumption in period 1 on the x-axis and consumption in period 2 on the y-axis).

(e) Graph her new life time budget constraint again if the interest rate is 20 percent.