· α Each week, an individual consumes x and y of two goods, and works for 1 hours. These three quantities are chosen to maximize the utility function U(x, y, 1) = a ln(x) + ß ln(y) + (1 − a − 3) ln(L − 1), which is defined for 0 ≤ 1 < L and for x, y > 0, and where a, ß> 0 and a + ß < 1. The individual faces the budget constraint px + qy wl, where w is the wage per hour. • State the optimization problem • Solve completely for the utility-maximizing levels of x, y, and I

· α Each week, an individual consumes x and y of two goods, and works for 1 hours. These three quantities are chosen to maximize the utility function U(x, y, 1) = a ln(x) + ß ln(y) + (1 − a − 3) ln(L − 1), which is defined for 0 ≤ 1 < L and for x, y > 0, and where a, ß> 0 and a + ß < 1. The individual faces the budget constraint px + qy wl, where w is the wage per hour. • State the optimization problem • Solve completely for the utility-maximizing levels of x, y, and I

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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