Time In The Budget Of The Consumer

The addition of time in the consumer's budget yields new theorems from demand theory while preserving the (logical) validity of the old ones. These new theorems concern additional Slutsky type equations relating quantities of goods demanded, hours worked, and total income to the wage rate, non-wage or time-independent income, and the relative time or price intensity of goods; the Slutsky equations with respect to price are preserved. The new equations place additional behavioral restrictions upon the standard consumer demand functions and permit the consumer's labor supply to be derived from his demand for goods. Since all the theory's variables are observable, it can be tested by estimating these functions. (Author).