Question
In: Economics
Priya has preferences over consumption and leisure given by U(C,L) = CL. Her total number of...
Priya has preferences over consumption and leisure
given by U(C,L) = CL. Her total number of available hours in a
given week is 100. Her non-labour income is £800. If she chooses to
work, she earns w = £20 per hour. If the government starts a
welfare policy that pays an amount of £B to all non-workers and
pays 0 to all workers, at what value of B will Priya opt out of the
labour force in order to go on welfare?
Solutions
Expert Solution
Solution: Priya has total available hour in a week = 100 hr
If she choose to work se will be earning wage = £20 per hour
Non-Labour Income for 100hr = £800----------(1)
If government is paying £B per hr to all non-worker
The the value of B from expression (1) wil be =£800100 hr=£8
Therefor value of B= £8
Rahul Sunny answered 2 years agoRelated Solutions
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