Scarcity and Working Hours

• Individuals make choices under scarcity to maximize wellbeing, focusing on trade-offs between work and leisure.

• Significant wage increases post-Industrial Revolution in the U.S. led to decreased annual working hours.

• Wealthier nations tend to consume more leisure, though there are variations, as seen in Ireland.

• Karim’s income model: y = wh illustrates the trade-off between income and hours worked.

• Preferences are represented through indifference curves, which are convex due to diminishing marginal utility.

• The Marginal Rate of Substitution (MRS) indicates the rate at which goods are exchanged.

• Karim’s budget constraint: c = w(24 - t) shows the trade-off between consumption and leisure, with its slope reflecting the Marginal Rate of Transformation (MRT) in graphical form.