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 2 years 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,...
Suppose that the utility function is U(c, l) = c^(a) l^(1−a) where < a < 1....
Suppose that the utility function is U(c, l) = c^(a) l^(1−a)
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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
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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...
Assume that a worker has the Utility Function U(C,L) = C 0.25 L0.75 “C” refers...
Assume that a worker has the Utility
Function U(C,L) = C 0.25 L0.75
“C” refers to consumption in dollars
and “L” to hours of leisure in a day. The worker has an offered
wage of $10 per hour, 20 hours available for leisure or work per
day, and $90 dollars a day from non-labour income.
a)
Find the budget constraint equation of the
individual.
b) Find
the optimal choice for the individual in terms of units of...
Jo has preferences described by the utility function, U = c0.5r0.5. Where c denotes her consumption...
Jo has preferences described by the utility function, U =
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2) due to health concerns, the government does not allow anybody
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Shelly’s preferences for consumption and leisure can be expressed as U(C, L) = min(C,2L) This utility...
Shelly’s preferences for consumption and leisure can be
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Shelly views consumption and leisure as compliments. There are 110
(non-sleeping) hours in the week available to split between work
and leisure. Shelly earns $10 per hour after taxes. She also
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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
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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...
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(a) (5 points) What is Amy’s expected utility if she doesn’t
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(b) (5 points) What is the actuarially fair premium for a
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