As may have been blatantly obvious to you all along, since Miranda is the only inhabitant of the island, all she's really doing is catching fish for herself and eating them. However, even a single agent economy such as this one has all of the features any economy would, such as supply and demand curves, and equilibrium prices and quantities. Miranda plays many roles in this economy, as all of the profit earned by Miranda the producer is transmitted to Miranda the shareholder, which represents additional income that Miranda the consumer can spend on fish in addition to the labor income earned by Miranda the worker. (a) Suppose Miranda earns both labor income and profit, so that pq = wl + π(p). Rewrite her utility maximization problem and find the new demand for fish qd(p) and leisure r(p).
As may have been blatantly obvious to you all along, since Miranda is the only inhabitant of the island, all she's really doing is catching fish for herself and eating them. However, even a single agent economy such as this one has all of the features any economy would, such as supply and
(a) Suppose Miranda earns both labor income and profit, so that pq = wl + π(p). Rewrite her utility maximization problem and find the new demand for fish qd(p) and leisure r(p).
(b) Find the
(c) Find the equilibrium hours of labor l* and labor r*.
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