Question
In: Economics
Consider the function u = cl^2 (c l squared). When the individual works they ear $15...
Consider the function u = cl^2 (c l squared). When the individual works they ear $15 an hour and and have 10 hours per day available for work. They receive non-labour income of $15 regardless of how much they work. What is their optimal choice of work time and consumption of goods? please show all work
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Consider the function u = cl^2 (c l squared). When the individual works they earn $15...
Consider the function u = cl^2 (c l squared). When the
individual works they earn $15 an hour and have 10 hours per day
available for work. They receive non-labour income of $15
regardless of how much they work. What is their reservation wage?
please show all work
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...
Consider an individual with the following utility function: U = min{c, h} Where c is consumption...
Consider an individual with the following utility
function:
U = min{c, h}
Where c is consumption and h is leisure. The wage rate is $15
per hour, and the total number of hours available to the individual
is normalized to 1.
Find out the optimal level of consumption, leisure and
labor.
The government imposes a tax of $2 per hour of labor. Find out
the new optimal values of consumption, leisure and labor.
Comment on the form of the utility...
Assume an individual has a utility function of this form U(C, L) = 40 + 5(CxL)...
Assume an individual has a utility function of this form U(C, L)
= 40 + 5(CxL) This utility function implies that the individual’s
marginal utility of leisure is 5C and her marginal utility of
consumption is 5L. The individual has an endowment of V=$40 in
non-labour income and T = 18 hours to either work (h) or use for
leisure (L). Assume that the price of each unit of consumption good
p=$2 and the wage rate for each hour of...
Suppose a worker's utility function is U(C, L) = C^2 +(2nL)^2 , where C denotes consumption...
Suppose a worker's utility function is U(C, L) = C^2 +(2nL)^2 ,
where C denotes consumption and L leisure. Let T denote time
available to split between leisure and work, w denote the wage rate
and V = 0 denote non-labor income (as in the lecture).
(a) What is the worker's optimal choice of C and L as a function
of w, T, and n?
(b) What is the worker's reservation wage as a function of T and
n?
(c)...
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)
where < a < 1. Calculate the slope of an indifference curve
for this utility function. What happens to the slope of the
indifference curve when c decreases and l increases? Explain.
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....
Consider an individual with utility function c^αl^1−α, where c is consumption, l is leisure, and α...
Consider an individual with utility function c^αl^1−α, where c
is consumption, l is leisure, and α ∈ (0, 1). The individual is
endowed with R units of nonlabor income and T units of time. The
individual earns wage w for each unit of time worked. The price of
a unit of consumption is p.
(a) What is the budget constraint for this individual?
(b) What is the price of leisure?
(c) Set up the appropriate Lagrangian for this agent’s
problem....
25) Consider the following one-period, closed-economy model. Utility function over consumption (C) and leisure (L) U(C,L)...
25) Consider the following one-period, closed-economy model.
Utility function over consumption (C) and leisure (L) U(C,L) = C
1/2 L 1/2 Total hours: H = 40 Labour hours: N S = H – L Government
expenditure = 30 Lump-sum tax = T Production function: Y = zN D
Total factor productivity: z = 2 The representative consumer
maximizes utility, the representative firm maximizes profit, and
the government balances budget. Suppose there is an increase in
total factor productivity, z, to...
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