Consumer Trade-Off
The Cost curve and the Benefits curve can be merged by equating
-
- the Effective Value returned by the labour invested with
- the Effective Value cost of the labour invested.
H* = the optimal level of “Health” that can be attained.
L* = the optimal investment of labour-time. Any investment of labour less than L* will yield less “Health” than slightly more labour. Any investment of labour more than L* will cost more “Health” than it yields.
This curve remains true whether one is talking about a single consumer, or the aggregate of all consumers in the economy.
