1.1. Radamel has an investment for which he receives a non-labor weekly income of $200. His wage is $50 per hour. (suppose the price of C is 1) 

1.1.1. Draw Radamel’s budget constraint 

1.1.2. Radamel got injured and had to switch jobs. He now earns $30 per hour. Draw Radamel’s new budget constraint. 

1.1.3. Due to his injury and the subsequent demotion, Radamel developed a test for gambling. Unfortunately, he gambled away the investment that gave him his non-labor income. Hence he no longer receives his weekly allowance of $200. Draw Radamel’s new budget constraint. 

2. 2.1. Let’s go back to better times for Radamel, before his injury. Remember he had a weekly allowance of $200 and an hourly wage of $50. Suppose that Radamel’s utility function is " = %.’ 

2.1.1. How many hours per week will he work? 

2.1.2. How much money will he spend in C? 

2.1.3. In one of his trips, Radamel was bit by a tik-tik fly who infected him with trypanosomes, bacteria that causes the sleeping sickness. Hence, now his sleeping hours increased, bringing down his available “awake” hours to 70. 

2.1.3.1. Draw Radamel’s new budget constraint. 

2.1.3.2. Will he work more of less hour than before being bit by the fly? 

2.1.4. After a complex treatment, Radamel was cured from his sleeping sickness, bringing his total “awake” hours back to 110. Now analyze his optimal choice after his injury. 

2.1.4.1. How many hours will Radamel work in his $30 per hour job? (He still has his weekly allowance of $200). 

2.1.4.2. How many hours will Radamel work in his $30 per hour job after he lost his allowance?