Chapter Learning Objectives

  • Outline the main changes in labor supply behavior that occurred in the United States over the last 70 years or so.
  • Explain the concept of an indifference curve and understand its main properties.
  • Derive an individual’s budget constraint.
  • Characterize the utility-maximizing choices of labor force participants and nonparticipants.
  • Explain income and substitution effects.
  • Understand how to construct individual and aggregate labor supply curves.