choice or the intertemporal choice between present and future consumption. In the labor-leisure choice, each

indifference curve shows the combinations of leisure and income that provide a certain level of utility. In an

intertemporal choice, each indifference curve shows the combinations of present and future consumption that

provide a certain level of utility. The general shapes of the indifference curves—downward sloping, steeper on

the left and flatter on the right—also remain the same.

A Labor-Leisure Example

Petunia is working at a job that pays $12 per hour but she gets a raise to $20 per hour. After family

responsibilities and sleep, she has 80 hours per week available for work or leisure. As shown in Figure B5, the

highest level of utility for Petunia, on her original budget constraint, is at choice A, where it is tangent to the
526 B • Indifference Curves

lower indifference curve (Ul). Point A has 30 hours of leisure and thus 50 hours per week of work, with income
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