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Well, now let's get underneath
the supply curve for labor.
Now, the key thing is that when
we talk about labor, it's
not a good, it's a bad.
The typical person doesn't
want to work.
The typical person is
not in this room.
You guys like to work.
The typically person actually
doesn't like to work.
Leisure is a normal good.
For the typical person, leisure
is a normal good.
They like time off.
Leisure is a good, which
means labor is a bad.
They don't like to work.
The problem is we don't
know how to
model bads in economics.
It's just we're used to
trading off between
two things you want.
When I used to trade-off, we
know how to model something
you want to get something
you don't want.
Indifference curves wouldn't
work, because
more wouldn't be better.
If you drew an indifference
curve for labor, it would
violate the more is
better assumption.
Because you wouldn't
want more.
You'd want less.
So the modeling trick we're
going to use whenever we're
modeling bads, is to model the
complementary good and then,
in the end, solve for the bad.
We're not going to
model labor.
We're going to model leisure.
And given the total amount of
hours you have to supply, the
total hours minus the
amount of leisure is
the amount of labor.
So we're going to
model leisure.
We're going to model the
good and then solve for
labor at the end.
So, in other words, if you have
24 hours a day you can
work, then your amount of hours
of work is 24 minus the
amount of leisure N. Call it N