8 16 14 6480 9 15 14 81 90 10 14 15 100 90 16 110 88 Graphically illustrate Sam's leisure demand curve and Barb's leisure demand curve.Place price on the vertical axis and leisure on the horizontal axis Given that they both maximize utility,how can you explain the difference in their leisure demand curves? It is important to remember that es leisure impliesmore hours spent working at the higher wage. Sam's leisure demand curve is downward sloping.As the price of leisure (the wage)rises,he chooses to consume less leisure to spend more time working at a higher wage to buy more goods.Barb's leisure demand curve is upward sloping.As the price of leisure rises,she chooses to consume more sure since her working hours are generating more inco This diffe rence demand can be explained by examining the income and substitution efectsfor the two individuals.The substitution effect measures the effect of the change in the price of leisure,keeping utility constant(the budget line will rotate around the current indifference curve).Since the substitution effect is always negative.a the price of eisure will caue both individuals to consume esleisure t measures the change in purchasing power caused by the change in the prioe of leisure.Here,when the price of leisure (the wage)rises,there is an increase in purchasing power (the new budget line will shift outwards) Assuming both individuals consider leisure to be a normal good (this is not a rease dem For s. purchasing power wll a,the ction ir ure dem and ed hy the substitution effect outweighs the increase in demand for leisure caused by the income effect.For Barb.her income effect is larger than her substitution effect. 7.The director of a theatre company in a small college town is considering changing the way he prices tickets.He has hired an economic consulting firm to estimate the demand for tickets.The firm has classified people who go the theatre into two groups,and has come up with two demand functions. The demand curves for the general public()and students()are given below p=500-5p Q=200-4p Graph the two demand cur on one gaph,with P on the verticalaxi and Q on the horizontal axis If the current price of tickets is $35. identify the quantity demanded by each group.1 8 16 14 64 80 1 9 15 14 81 90 1 10 14 15 100 90 1 11 14 16 110 88 Graphically illustrate Sam’s leisure demand curve and Barb’s leisure demand curve. Place price on the vertical axis and leisure on the horizontal axis. Given that they both maximize utility, how can you explain the difference in their leisure demand curves? It is important to remember that less leisure implies more hours spent working at the higher wage. Sam’s leisure demand curve is downward sloping. As the price of leisure (the wage) rises, he chooses to consume less leisure to spend more time working at a higher wage to buy more goods. Barb’s leisure demand curve is upward sloping. As the price of leisure rises, she chooses to consume more leisure since her working hours are generating more income. This difference in demand can be explained by examining the income and substitution effects for the two individuals. The substitution effect measures the effect of the change in the price of leisure, keeping utility constant (the budget line will rotate around the current indifference curve). Since the substitution effect is always negative, a rise in the price of leisure will cause both individuals to consume less leisure. The income effect measures the change in purchasing power caused by the change in the price of leisure. Here, when the price of leisure (the wage) rises, there is an increase in purchasing power (the new budget line will shift outwards). Assuming both individuals consider leisure to be a normal good (this is not a necessary assumption for Sam), then the increase in purchasing power will increase demand for leisure. For Sam, the reduction in leisure demand caused by the substitution effect outweighs the increase in demand for leisure caused by the income effect. For Barb, her income effect is larger than her substitution effect. 7. The director of a theatre company in a small college town is considering changing the way he prices tickets. He has hired an economic consulting firm to estimate the demand for tickets. The firm has classified people who go the theatre into two groups, and has come up with two demand functions. The demand curves for the general public (  Qgp ) and students (  Qs ) are given below.  Qgp = 500 − 5P Qs = 200 − 4P a. Graph the two demand curves on one graph, with P on the vertical axis and Q on the horizontal axis. If the current price of tickets is $35, identify the quantity demanded by each group