Question
In: Economics
Jenny has preferences given by the utility function U(C; L) = C2L so that the slope...
Jenny has preferences given by the utility function U(C; L) = C2L so that
the slope of her indi§erence curve is C : Johnny has the same preferences 2L
wesawintheclassexample(i.e. U(C;L)=CLsotheslopeofhisindi§erence
curve at any point is C): L
(1) Which of them has the relatively stronger preference for consumption over leisure? Explain.
(2) They can both earn $10 per hour, they both have a non-labor income of $300 per week and they have 110 hours per week of non-sleeping time (as in class). Who works the most hours? How much do each of them make per week?
(3) What are their reservation wages?
(4) Starting from their preferred choice of work hours at $10 per hour (from part 2), suppose they were o§ered overtime at $20 per hour how many hours of overtime would each of them want to put in? How much would each of them earn?
(5) Plot out the labor supply curves for Johnny and Jenny. Do either of them have backward bending labor supply curves?
i need number five only nothing else the labor supply curve and if they bend backward nothing else
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
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,...
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