Labor-Leisure Model in the Everyday Life

roil-Leisure Model in the Everyday Life I care many separate college students am not electric currently seeking arrive at in the proletariat force. As a student athlete acting play I am evermore juggling my epoch amongst my studies as a senior Economics major, and maximise my golfing say-so and chasing my ultimate dream of becoming a professional golfer. Throughout this w entirelypaper I volition explain how I maximize my emolument in different circumstances using the labor-leisure mystify.As I am not actively looking for twist in the labor market my spiritlessness ignore is so steep thither are no tangencies to my reservation wage, which is define as the lowest wage rate at which a proletarian is leading to accept a job. By dedicating all my time to study and practise, and none to the labor force my impassiveness curve has no impinging to my bashfulness. As a rational person who wants to maximize expediency the current wage rate is not steep enough for me to substitute work for things I prefer to do in my free time, such as playing golf or perusing for a test.I am rose-cheeked enough that my parents set about the opportunity to help me financially during my time at college, so I have a source of unearned income that I receive for working zero hours in the labor market. This unearned income is limnn by the spike in underframe 1 below. As mentioned above because of my high regard for leisure and the modest yield I am offered as a student with about college experience my indifference curve has no tangencies to my constraint. Figure 1 depicts where utility is maximized at psyche A.As a utility maximizer it suits my personal preferences to accept the unearned income devoted to me by my parents and consume more than leisure time. Point A represents the highest utility that can be reached by myself, given the budget constraint. The labor-leisure model makes the assumption that leisure is a desirable product, which in my case i t is. Furthermore, substituting three or four hours in the labor force for more hours of leisure time is an easy decision for a utility maximizer to make. The government faces similar problems with modern day welfare.Because of the modest wages offered to unskilled workers, and size of recent welfare packages many people maximize utility by removing themselves from the labor force, and accept benefits offered by the government whilst overpowering more leisure time. As mentioned above, during school I am constantly dividing my time betwixt practising for golf, and perusal my current classes. Using the Production Possibilities marge (shown in Figure 2 below) I can diagrammatically show the choices I make in a variety of scenarios as a utility maximizer.Like close economical models it is a simplification of reality that represents economic processes by a square up of variables and a set of logical vicenary relationships between them. To maintain the simplicity of the model I am assume my average day consists of 16 hours, of which I divide my time between either practising golf or studying. I rarely dedicate all my waking hours to specifically golf or studying, just for the consistency of this model that assumption allow be made.Figure 2 shows my personal output possibilities frontier, which shows the alternate(a) outputs of golf practise and studying that can be produced by myself in any given day. The fruit possibility curve clearly exhibits the notion of technical efficiency. Any point inside the curve is considered inefficient, and any point outside the curve is unachievable. The production possibility frontier clearly shows that depending on how I allocate my time directly affects my productivity in both areas.For example, if I dedicate a disproportionate amount of time to studying my golf performance will decline as my grades increase, and vice-versa. As shown in Figure 2 in that location are many different combinations of golf practise a nd studying. Maximizing utility in this model is my selection of the most appropriate combination of studying and golf practise for the circumstances of that day. One of the biggest advantages of playing an individual bluster is having the ability to design a schedule that suits my day to day activity.Points A, B, C, D and E all represent possible utility maximizing schedules on my production possibilities frontier. There are many factors that could affect my everyday schedule. For example, If I have a particularly important tournament coming up I may find it utility maximizing to substitute more or less hours studying for some hours practising at the golf course. This schedule would make my indifference curve steeper than usual, like the indifference curve U4 in name 2. My grades may suffer at this schedule however, performing well in tournaments also just as important so the schedule is unchanging utility maximizing.I will maximize utility at a in all different point on my pr oduction possibilities frontier during finals week. I will be more likely to substitute hours practising golf for time studying during finals week. As time worn-out(a) studying becomes more valuable my indifference curve will become much flatter than on an unexceptional day, like the indifference curve U2 in figure 2. As mentioned above, there are obvious flaws to this production possibilities frontier. However, an economic model is a simplification of reality that represents economic processes by a set of variables and a set of logical quantitative relationships between them. I have never spent an entire day where I dedicated all my waking hours to either studying or practising golf. So despite point F on figure 2 not statistically being utility maximizing it is where I normally operate. Normal daily activities like eating, talking with friends and other general errands are not considered in this model. The shaded area in figure 2 represents time I spend doing activities that are unaccounted for by golf practise and studying. I plan to graduate in May 2013 with a Bachelors of Science degree in Economics.My degree is a sign to authorisation employers that I have been trained in the field of economics. According to the enthronement model of commandment I will move from a phallic with some college experience to a male college graduate. The investment model of education suggests that college graduates are more likely to receive additional training in their early years of employment resulting in higher wages. The potential for a higher wage could have a notable affect on my post-college labor-leisure model. The higher wage creates a steeper constraint, as seen below in Figure 3.Figure 3 Post-College Labor-Leisure Model If offered a wage high enough, the brand-new constraint could become steep enough to where my indifference curve would have a point of tangency with my reservation wage, as seen above. As a result of the additional training I have received ( a college education) my constraint has moved from the line AD to line AE. The severe increase in wage has increase my cost of consuming leisure considerably. My utility is instantaneously maximized by joining the labor force, as seen in the move from U1 to U2 on figure 3.The radical change to my labor-leisure model has not taken localise without a huge substitution and income essence. The new wage greatly increased my costs of consuming leisure, so much so I substituted some hours of leisure for hours of work. This is known as the substitution feat, and can be seen graphically between points B and C. An income effect is also present. After graduation my parents will not continue to hand me money for nothing in return, so the unearned income at point F is no longer achievable.This falling off in income reduces my purchasing power of leisure and will increase my make for labor hours. This income effect is shown graphically between points A and B. The total effect can be seen gra phically between points A and C. The substitution and income effect usually move an individuals preferences in opposite directions, but because I was choosing to work zero hours the presence of either effect could only(prenominal) increase my demand for work. In conclusion, I can portray how I make everyday decisions using the labor-leisure model and production possibilities frontier frameworks.As with most economic models, it drastically simplifies reality. The simplification however is necessary, due to the complex personality of economic variables simplicity aids clarity. For an economic model to be no-hit two appropriate variables must be chosen. In my personal event the relationship between practising golf and studying for classes are directly related. By simplifying and selecting applicable variables complex economic information can be uttered logically, as shown above. Works Cited EconoMonitor EconoMonitor The Current Downturn Labor-leisure Tradeoff or technological Reg ress. EconoMonitor EconoMonitor A The Current Downturn Labor-leisure Tradeoff or Technological Regress. Web. 01 November 2012. . Heckman, James. JSTOR. Web. 05 November 2012. . Ehrenberg, Ronald G. , and Robert Stewart. Smith. late Labor Economics Theory and Public Policy. Glenview, IL Scott, Foresman, 1987. Print. Labor Supply. Labor Supply. Web. 06 November 2012. . Nicholson, Walter. Intermediate Microeconomics And Its Application. Houghton, Harcourt, 2000. Print.