. Jane has just arrived home from college for the summer and her parents tell her...

. Jane has just arrived home from college for the summer and her parents tell her that they will give her $80 a week in spending money. She has realized that it will not be enough for her to go out with her friends so she will have to get a job. She figures out that the leisure time she has available after allowing for sleeping and other essentials is 60 hours a week. She can get a job at a nearby Burger King for $w an hour. Her utility function for leisure (R) and money to spend on consumption (C) is U = 2RC.

a) Draw a graph to illustrate Jane’s optimal choice. Please indicate Jane’s labor supply in the graph.

b) What will be Jane’s weekly labor supply at the wage rate of $w an hour?

c) If Burger King would like to have Jane working for at least 25 hours a week, what wage rate do they have to offer?

Expert Solution

Hey, I've done part b before a, so that it's easier to draw a graph.

Let me know if anything is unclear :)

Rahul Sunny answered 5 months ago

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