Amanda faces a tradeoff between labor L and leisure R. She consumes a composite good C. When she works, she earns an hourly wage of $19, and she has a maximum of twenty four hours to spend on labor and leisure together. Whatever time she does not spend working, she spends on leisure. Amanda starts with an initial endowment of 27 units of the composite good, which she can buy and sell freely at a market price of $6. Given this information, what is Amanda's full or implicit income? Ans/ $ _(numeric). N

Amanda faces a tradeoff between labor L and leisure R. She consumes a composite good C. When she works, she earns an hourly wage of $19, and she has a maximum of twenty four hours to spend on labor and leisure together. Whatever time she does not spend working, she spends on leisure. Amanda starts with an initial endowment of 27 units of the composite good, which she can buy and sell freely at a market price of $6. Given this information, what is Amanda's full or implicit income? Ans/ $ _(numeric). N

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The utility of Amanda for leisure (L) and income (Y) is U = LY. The price of income is 1. If Amanda uses her spare L hours a day, (24 - L) hours will be labored. Since wages are w, the daily income is (24 - L). If the wages are positive, show that the optimal number of leisure hours that Amanda will use will always be the same. How much leisure time does Amanda demand and how much work time do she want to provide?
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