Consider Alexei who makes $1,400 per week and just won a ‘set for life’ lottery ticket which involves a fortnightly paym
Posted: Thu Apr 28, 2022 11:40 am
Consider Alexei who makes $1,400 per week and just won a ‘set
for life’ lottery ticket which involves a fortnightly payment of
$10,000 for 20 years. Currently he works 35 hours per week. Now do
the following: • Illustrate the effect of the lottery win on
Alexei’s budget constraint using a fully labelled diagram where i)
the horizontal axis represents the hours of free time per week, and
ii) the vertical axis represents Alexei’s weekly consumption. •
Illustrate on the same diagram Alexei’s optimal decisions before
and after the lottery win along with his indifference curves. •
Based on your diagram, discuss whether Alexei will quit his job
for life’ lottery ticket which involves a fortnightly payment of
$10,000 for 20 years. Currently he works 35 hours per week. Now do
the following: • Illustrate the effect of the lottery win on
Alexei’s budget constraint using a fully labelled diagram where i)
the horizontal axis represents the hours of free time per week, and
ii) the vertical axis represents Alexei’s weekly consumption. •
Illustrate on the same diagram Alexei’s optimal decisions before
and after the lottery win along with his indifference curves. •
Based on your diagram, discuss whether Alexei will quit his job