Lisa has 168 hours per week available for leisure (R) and work (L). She can earn...

Lisa has 168 hours per week available for leisure (R) and work (L). She can earn $20 per hour and the price of consumption (C) goods is $1. Her utility function is U(R,C)=R²C

a) (3) Find Lisa's optimal choice of leisure and consumption and work.

b) (2) If Lisa in addition receives $200 per week in income from her family trust, what would her budget line look like? Draw it.

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Tamara has 80 hours per week that she can allocate to work or leisure. Her job...

Tamara has 80 hours per week that she can allocate to work or leisure. Her job pays a wage rate of $20 per hour, but Tamara is being taxed on her income in the following way. On the first $400 that Tamara makes, she pays no tax. That is, for the first 20 hours she works, her net wage (what she takes home after taxes) is $20 per hour. On all income above $400, Tamara pays a 75% tax. That...

Tamara has 80 hours per week that she can allocate to work or leisure. Her job...

Jane has 2,000 hours that she can allocate to work (H) or to leisure (L), so...

Jane has 2,000 hours that she can allocate to work (H) or to leisure (L), so H+L=2,000. If she works, she receives an hourly wage of $10. Any income she earns from working, she spends on food (F), which has price $2. Jane’s utility function is given by U(F,L) = 150*ln(F)+100*ln(L). The government runs a TANF program, which is defined by a benefit guarantee (BG) of $5,000 and a benefit reduction rate (BRR) of 50%. How many hours, H*, does...

You have 60 hours a week available to spend either working or leisure. You can work...

You have 60 hours a week available to spend either working or leisure. You can work at a wage of $5 per hour. Your parents also provide you an allowance of $100 per week, no matter how much you work. Your only source of income is the allowance plus your wage earnings. a) in a carefully labelled diagram, draw your consumption-leisure budget constraint. show an equilibrium where you choose to work 40 hours per week b) in an effort to...

Siddhartha has 50 hours per week to devote to work or leisure. He has been working...

Siddhartha has 50 hours per week to devote to work or leisure. He has been working for $8 per hour, but now that he has finished an introductory economics class, his earning power has shot up to $16 per hour. Based on the information in the table below, calculate his original utility-maximizing choice and his utility-maximizing choice after the wage increase. Hours of Leisure Total Utility from Leisure Income Total Utility from Income 0 — 0 — 10 200 80...

L ANALYTICAL QUESTION Suppose you have only 20 hours per week to study or leisure. The...

L ANALYTICAL QUESTION Suppose you have only 20 hours per week to study or leisure. The following table indicates the the tradeoff between leisure time (not studying) and the grade point achieved as a result of studying. Combination Leisure time (hours/week) Grade-point average (GPA) A 20 0 B 18 1.0 C 14.5 2.0 D 10 3.0 E 0 4.0 A. From the table above, draw the PPC that shows the possible combinations and label I. attainable, II. unattainable, III. attainable...

Mary is a single mother, with $250 in nonlabor income per week, and she can earn...

Mary is a single mother, with $250 in nonlabor income per week, and she can earn $15 per hour working between 0 and 60 hours per week. If Mary decides to work, then she will neeed to pay high-quality day care, which costs a fixed $150 per week. Now suppose a welfare program is put in place to subsidize the cost of day care for single mothers working at least 20 hours per week. Suppose that as long as the...

Do engineers work more hours per week than the national average hours per week worked? ...

Do engineers work more hours per week than the national average hours per week worked? [ Choose ] Two-sided test One-sided lower test One-sided upper test Is the gas mileage of a smart for two coupe really less than 40 mpg? (According to the 2013 EPA gas mileage figures, the answer is yes. Doesn't seem that smart…) [ Choose ] Two-sided test ...

Cindy gains utility from consumption C and leisure L. The most leisure she can consume in...

Cindy gains utility from consumption C and leisure L. The most leisure she can consume in any given week is 80 hours. Her utility function is: U(C, L) = C(1/3) × L(2/3). a) Derive Cindy’s marginal rate of substitution (MRS). Suppose Cindy receives $800 each week from her grandmother––regardless of how much Cindy works. What is Cindy’s reservation wage? b) Suppose Cindy’s wage rate is $30 per hour. Write down Cindy’s budget line (including $800 received from her grandmother). Will...

Consider two individuals with endowments of T= 60 hours (per week) of leisure, nonlabour income of...

Consider two individuals with endowments of T= 60 hours (per week) of leisure, nonlabour income of Y, and a wage of $7.50 per hour. At this wage, assume that workers are constrained by their employers to work 40 hours per week, or not at all. a. On carefully labelled diagrams, show the equilibrium for a worker for whom 40 hours is the optimum labour supply and a worker who would like to work 50 hours, but still prefers the 40-hour...

Subjects