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or call it L. We'll call it N
because L, typically, we
think of as labor.
Let's call leisure N for
reasons I don't quite
understand.
Let's just use that.
Basically the amount
of hours you can
work is 24 minus leisure.
So if we solve for the optimal
amount of leisure you want, we
can obviously get the amount
of labor you supply.
So the trick when modeling a bad
is not to model the bad.
It's to model the complementary
good.
In this case, the complementary
good is leisure.
So we're going to model the
trade-off between leisure and
consumption and use the result
of that to solve for the
amount of labor you supply.
So it's the general modeling
trick you need to understand,
which is turn a bad
into a good.
That's the modeling trick.
Because we know how
to model the
trade-off between two goods.
We don't know how to model
the trade-off with a bad.
So to think about that, let's
go to Figure 7-3, and let's
talk about what's underneath
a labor supply curve.
What's underneath a labor supply
curve is the trade-off
between how much leisure you
want and how much consumption
you can have. So you see here,
here's a trade-off.
On the y-axis is the amount
of goods you can have. You
earn a wage, w.
The y-axis is the amount of
goods you can have from a
day's work.
So you earn w per hour.
That means the most goods
you can have from a
day's work is 24w.
If you worked all 24 hours
at that wage, you
can have 24w goods.
On the other hand, if you work
not at all, then you take 24
hours in leisure and have no
consumption from that day.
So we see as you move