Question
In: Economics
Dudley has a utility function U(C, R) = CR, where R is leisure and C is...
Dudley 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. Dudley has a non-labor income of $48 per day.
(a) If Dudley 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, Dudley is now paid $ 8 per hour. How will his leisure time change?
(c) Analyze the changes in Dudley’s leisure time using the substitution effect and the income effect.
*Also (C), please explain it specifically, not copying the solution already answered. Thanks.
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
Dudley has a utility function U(C, R) = CR, where R is leisure and C is...
Dudley 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.
Dudley has a non-labor income of $48 per day.
(a) If Dudley 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, Dudley is now paid $ 8 per hour.
How will his leisure...
Robinson has a utility of u(c, r) = cr where c = coconuts and r =...
Robinson has a utility of u(c, r) = cr where c = coconuts and r
= leisure. In order to produce coconuts, technology dictates the
production, given by c = a(L^1/2) where a = 8, and L = labour. The
time constraint is r+L = 12. How many units of labour will be
used?
A individual has a utility function u(c) = √ c, where c is the individual’s consumption....
A individual has a utility function u(c) = √ c, where c is the
individual’s consumption. (The individual consumes his entire
wealth.) The individual’s wealth is $40,000 per year. However,
there is a 2% chance that he will be involved in a catastrophic
accident that will cost him $30,000.
PLEASE SHOW WORK
a. What is the individual’s utility from consumption if there is
no accident? What is his utility if there is an accident? What is
his expected utility?
b....
Question 1: Given the following utility function: (U=Utility, l=leisure, c=consumption) U = 2l + 3c and...
Question 1:
Given the following utility function: (U=Utility, l=leisure,
c=consumption)
U = 2l + 3c
and production function: (Y=Output, N or Ns=Labour or Labour
Supply)
Y = 30N1/2
If h = 100 and G =10 (h=Hours of labour, G=Government spending).
Find the equilibrium levels of the real wage (w), consumption (c),
leisure (l), and output (Y).
Question 2: (Continuting from question 1)
a, Find the relationship between total tax revenue and the tax
rate if G = tWN. (G=Government spending,...
Question 1: Given the following utility function: (U=Utility, l=leisure, c=consumption) U = 2l + 3c and...
Question 1: Given the following utility function: (U=Utility,
l=leisure, c=consumption) U = 2l + 3c and production function:
(Y=Output, N or Ns=Labour or Labour Supply) Y = 30N1/2 If h = 100
and G =10 (h=Hours of labour, G=Government spending). Find the
equilibrium levels of the real wage (w), consumption (c), leisure
(l), and output (Y). Question 2: (Continuting from question 1) a,
Find the relationship between total tax revenue and the tax rate if
G = tWN. (G=Government spending,...
Robert has utility function u(c,l) = cl over consumption, c, and leisure, l. Robert is endowed...
Robert has utility function u(c,l) = cl over consumption, c, and
leisure, l. Robert is endowed with 16 hours of leisure. Let the
price of consumption be p = 1. Robert can sell his time in the
labor market at hourly wage, w. The equilibrium we will consider
implies zero firm profits, so labor income is the only source of
income for consumers. Thus, Robert’s budget line can be written by
c + wl = 16w. Production of the consumption...
Robert has utility function u(c,l) = cl over consumption, c, and leisure, l. Robert is endowed...
Robert has utility function u(c,l) = cl over consumption, c, and
leisure, l. Robert is endowed with 16 hours of leisure. Let the
price of consumption be p = 1. Robert can sell his time in the
labor market at hourly wage, w. The equilibrium we will consider
implies zero firm profits, so labor income is the only source of
income for consumers. Thus, Robert’s budget line can be written by
c + wl = 16w. Production of the consumption...
Amy’s utility function is U = √ C, where C is consumption and is given by...
Amy’s utility function is U = √ C, where C is consumption and is
given by C = Income − Expenses. Amy’s income is $10,000 and there
is a 5% chance that she will get sick, which would cost $3,600 in
medical expenses.
(a) (5 points) What is Amy’s expected utility if she doesn’t
have insurance?
(b) (5 points) What is the actuarially fair premium for a
full-coverage insurance plan? What is the actuarially fair premium
for an insurance plan...
Suppose that an individual has a utility function of the form U = Y½ where U...
Suppose that an individual has a utility function of the form U
= Y½ where U is utility and Y is income.
a) Calculate the utility level for Y values of $10,000,
$40,000, $90,000, $160,000, and $250,000 and then plot the
individual’s total utility function.
b) This individual is currently earning $90,000 but has
a 50-50 chance of earning either $40,000 or $160,000 in a new
job.
i) Calculate the expected income and utility from the
new...
Woodstock has preferences for leisure time and birdseed defined by the utility function U(l,B)= l.75B.75, where...
Woodstock has preferences for leisure time and birdseed defined
by the utility function U(l,B)= l.75B.75,
where l is hours of leisure time and B is the number of birdseeds
Woodstock consumes. Suppose Woodstock has 24 hours a day for
leisure time and for gathering birdseed. He gathers 20 birdseeds
each hour he works (e.g., 20 birdseed is Woodstock’s wage). Let H
be the hours Woodstock gathers birdseed. Woodstock chooses leisure
time and birdseed according to the optimization problem
maxl,b l.75B.75...
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