Question

Alice's utility function is U ( C , L ) = C · L

She can work up to 80 hours each week and she has no non-labor income.

1)If Alice's non-labor income is zero, what will Alice's reservation wage be?

2)If Alice's non-labor income is $168 per week, what will Alice's reservation wage be?

3)If Alice's non-labor income is zero, how many hours will Alice work when wage is $20 per hour?

4)If Alice's non-labor income is zero, how many more hours will Alice work when her wage increases from $20 per hour to $200 per hour?

Answer #1

Emma has a utility function of u(c, l) =
9c1/3l 2/3 . She works as a
policewoman at a wage of 30 dollars an hour. She doesn’t have any
income outside of her work. Calculate the optimal hours of work she
would pick and her optimal consumption.

Brittanys preferance for money income and leisure can be
exoressed as U(Y,L)= (Y-200)*(L-50). This utitlity function implies
that Brittany's marginal utility of leisure is (Y-200) and her
marginal utility of money income is (L-50). There are 168 hours in
the week available to split between work and leisure. Brittany
earns $20 per hour after taxes. She also recieves $400 worth of
welfare benefits each week regardless of how much she works.
A) Graph Brittany budget line.
B) Find Brittanys optimal...

Santi derives utility from the hours of leisure (l) and from the
amount of goods (c) he consumes. In order to maximize utility, he
needs to allocate the 24 hours in the day between leisure hours (l)
and work hours (h). Santi has a Cobb-Douglas utility function, u(c,
l) = c 2/3 l 1/3 . Assume that all hours not spent working are
leisure hours, i.e, h + l = 24. The price of a good is equal to 1...

Adam has a utility function U(C,R) = CR, where R is leisure and
C is consumption per day. He has 16 hours per day to divide between
work and leisure. Mark has a non-labor income of $48 per day.
(a) If Mark is paid a wage of $6 per hour, how many hours of
leisure will he choose per day?
(b) As a result of a promotion, Mark is now paid $ 8 per hour. How
will his leisure time...

Santi derives utility from the hours of leisure (l) and from the
amount of goods (c) he consumes. In order to maximize utility, he
needs to allocate the 24 hours in the day between leisure hours (l)
and work hours (h). Santi has a Cobb-Douglas utility function,
u(c,l) = c2/3l1/3. Assume that all hours not spent working are
leisure hours, i.e, h + l = 24. The price of a good is equal to 1
and the price of leisure...

Jenny has preferences given by the utility function U(C; L) = C
2L so that the slope of her indi§erence curve is C 2L : Johnny has
the same preferences we saw in the class example (i.e. U(C; L) = CL
so the slope of his indi§erence curve at any point is C L
1.Continuing from the questions on Homework 1, suppose the
following Earned Income Tax Credit (EITC) scheme is put in place.
For those whose earned income is...

Consider the static labor supply model discussed in class, and
assume U(c,l) = C0.2l(0.8). A worker chooses his level of labor
supply and consumption according to the following maximization
problem:1 maxU(c,l) = c0.2 ×l0.8, s.t. C ≤ wh + Y h = 18−l C,l ≥ 0
a) Assume that non-labor income Y = 100$ and that the wage rate is
w = 10$/hour. Find the individual’s optimal level of labor supply
(h) and his optimal level of consumption (c). b)...

Bernice is has the following utility over leisure (l) and
consumption(c): u(l,c) = min{l,c}. We presume that the wage is $9
and that the time allocation is T = 100. The price of consumption
is normalized at $1. She has no other income.
(a) How much will she consume and how much time will she
work?
(b) If the wage rises to $19, how much will she consume and how
much time will she
work?
(c) Is the supply of...

1)Suppose that the utility function of a household is: U(c,l) =
2c +4l What is the marginal rate of substitution between
consumption and leisure?
2)Y = 8L^0.5 What is the marginal product of labour when there
are 4 employees in the economy?
3)Suppose that a household must pay $100 in taxes and can work a
maximum of 16 hours at a wage of $10 per hour. What is the maximum
this household can consume in this period?

Let Jane's Utility function be given by: U=100 x ln(C) + 50 x
ln(L) where C is consumption (in dollars) per year and L is hours
of leisure per year. Jane can make $15 per hour and can work up to
2,000 hours per year.
a. set up the maximization problem, showing the budget
constraint.
b. How many hours will Jane want to work per year

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 1 minute ago

asked 1 minute ago

asked 2 minutes ago

asked 2 minutes ago

asked 3 minutes ago

asked 3 minutes ago

asked 6 minutes ago

asked 7 minutes ago

asked 7 minutes ago

asked 7 minutes ago

asked 11 minutes ago

asked 11 minutes ago