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5. An individual has a Cobb-Douglas utility function U(m, l) = mel, where m is income and l is leisure, i.e. the individual derives utility from earning money and also from having fun. a and b are positive constants, with a +b < 1. A total of T, hours are to be allocated between work W and leisure l, so that W+l= To. If the hourly wage is w, then m =wW. Solve completely.

5. An individual has a Cobb-Douglas utility function U(m, l) = mel, where m is income and l is leisure, i.e. the individual derives utility from earning money and also from having fun. a and b are positive constants, with a +b < 1. A total of T, hours are to be allocated between work W and leisure l, so that W+l= To. If the hourly wage is w, then m =wW. Solve completely.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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5. An individual has a Cobb-Douglas utility function U(m, l) = mªl», where m is income and l is leisure, i.e. the individual derives utility from earning money and also from having fun. a and b are positive constants, with a + b < 1. A total of T, hours are to be allocated between work W and leisure l, so that W+1 = To. If the hourly wage is w, then m =wW. Solve completely.
Transcribed Image Text:5. An individual has a Cobb-Douglas utility function U(m, l) = mªl», where m is income and l is leisure, i.e. the individual derives utility from earning money and also from having fun. a and b are positive constants, with a + b < 1. A total of T, hours are to be allocated between work W and leisure l, so that W+1 = To. If the hourly wage is w, then m =wW. Solve completely.
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