Question
In: Economics
Suppose marginal utility from leisure is given by 3c0.5/(2ℓ0.5) and marginal utility from consumption is given...
Suppose marginal utility from leisure is given by
3c0.5/(2ℓ0.5) and marginal utility from consumption is given by
3ℓ0.5/(2c0.5) and that an individual can work up to 24 hours per
day at a wage of $20 per hour.
A. Write the mathematical condition which must be satisfied in
order for a worker to participate in the labour force. Write the
two mathematical conditions which a participant's optimal choice
must satisfy (write them in terms of c and ℓ rather than Y and
ℓ).
B. Write a formula for the worker's reservation wage as a
function of non-labour income YN. If YN=$240 then WR=........ and
the individual (will/will not) work. If YN=$720 then WR= .......
and the individual......... (will/will not) work.
C. Suppose YN=$2400. Write the formula for this individual's
potential income constraint. This individual will choose to work
....... hours. So they will have ....... hours of leisure and spend
$........ on consumption.
D. Suppose YN=$100. Write the formula for this individual's
potential income constraint. This individual will choose to work
.........hours. So they will have .........hours of leisure and
spend $ ........ on consumption.
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Suppose an individual experiences utility from consumption C and hours of leisure λ. Consider a period...
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period of length T = 168 hours. Suppose the price P of a unit of
output is $10. Suppose a person’s particular tastes and preferences
can be represented by the utility function U(C, λ) = (C - 100) x (λ
- 50). Suppose the individual can command a net wage of $40 per
hour. During the period suppose...
Cindy gains utility from consumption C and leisure L. The most leisure she can consume in...
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a) Derive Cindy’s marginal rate of substitution (MRS). Suppose
Cindy receives $800 each week from her grandmother––regardless of
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b) Suppose Cindy’s wage rate is $30 per hour. Write down Cindy’s
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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,...
What is the marginal utility when total utility increases from 34 to 42 after consumption of...
What is the marginal utility when total utility increases from
34 to 42 after consumption of 1 unit?
A) 2
B) 4
C) 6
D) 8
Calculate total
utility based on the following information;
Unit 1 Marginal
Utility = 9
Unit 1 Marginal
Utility = 8
Unit 1 Marginal
Utility = 4
Unit 1 Marginal
Utility = 1
A) 22
B) 23
C) 24
D) 25
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Explicit costs =
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Implicit costs =...
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Phil’s utility for consumption and leisure can be expressed as:U(C, L) = C1/3L a. Find the...
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a. Find the expression for Phil’s marginal rate of substitution
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b. What does Phil’s utility function tell us about his relative
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c. When L = 100 and C = 500, how much would Phil be willing to
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