5. Cindy gains utility from consumption C and Leisure L. Then most leisure she can consume in any given week is 110 hours. Her utility function is U(C, L) = C × L. Cindy receives $660 each week from her great-grandmother. (a) Find her marginal rate of substitution |M RS|. (b) Find her reservation wage. (c) Interpret the reservation wage.

5. Cindy gains utility from consumption C and Leisure L. Then most leisure she can consume in any given week is 110 hours. Her utility function is U(C, L) = C × L. Cindy receives $660 each week from her great-grandmother. (a) Find her marginal rate of substitution |M RS|. (b) Find her reservation wage. (c) Interpret the reservation wage.

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter7: Demand And Supply

Section7.1: Demand

Problem 4R

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5. Cindy gains utility from consumption C and Leisure L. Then most leisure she can consume
in any given week is 110 hours. Her utility function is U (C, L) = C × L. Cindy receives $660
each week from her great-grandmother.
(a) Find her marginal rate of substitution |M RS|.
(b) Find her reservation wage.
(c) Interpret the reservation wage.

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