Question
In: Economics
2a) In the consumption/leisure model, let the consumer’s utility function be U(C,l)=C.25+l.25. Suppose Pc=$1 and w1=$10...
2a) In the consumption/leisure model, let the consumer’s utility function be U(C,l)=C.25+l.25. Suppose Pc=$1 and w1=$10 determine the optimal amount of C and L and the equation for the labor supply.
b) Suppose w2=$12 determine the new optimal C and L and determine the substitution and income effects of the price change of leisure
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
A. In the consumption/leisure model, let the consumer’s utility function be U(C,l)=C.25+l.25. Suppose Pc=$1 and w1=$10...
A. In the
consumption/leisure model, let the consumer’s utility function be
U(C,l)=C.25+l.25.
Suppose Pc=$1
and w1=$10
determine
the optimal amount of C and L and the equation for the labor
supply.
B. Suppose
w2=$12
determine
the new optimal C and L and determine the substitution and income
effects of the price change of leisure.
In the consumption/leisure model, let the consumer’s utility function be U(C,l)=C.25+l.25. Suppose Pc=$1 and w1=$10 determine...
In
the consumption/leisure model, let the consumer’s utility function
be U(C,l)=C.25+l.25. Suppose Pc=$1 and w1=$10 determine the optimal
amount of C and L and the equation for the labor supply.
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...
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...
8、Assume that utility depends on consumption c and leisure l , U(c,l) . (a) Define reservation...
8、Assume that utility depends on consumption c and leisure l ,
U(c,l) .
(a) Define reservation wage.
(b) “The reservation wage increases with (i) non-labor income,
(ii) fixed monetary costs of work, (iii) fixed time costs of work,
and (iv) the price of consumption.” Prove or disprove each of these
four claims.
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.
Consider the consumer’s optimization problem in the one-period model. Utility is: u ( c , l...
Consider the consumer’s optimization problem in the one-period
model. Utility is:
u ( c , l ) = ln ( c ) + γ ln ( l )
where c is consumption of goods, l is leisure, and γ is a
constant. The consumer’s nominal budget constraint is:
P c = W ( h − l )
where P is the price of goods; W is the nominal wage; and h is
the total hours in the period....
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