e. If the payment for each exterminated mouse is P=$4, find the wage rate W* that creates16. In this labor market, there is one worker (Arnold) and one firm (Ex-Terminator Pest Co).(Assume that this is a competitive market.) Arnold gets utility from consumption (C) and leisure(L), according to U(C, L) = In C + In L. His budget constraint is C = WH + Y, where H is thenumber of hours he works in the week and W is his hourly wage rate. There are 100 total ours inthe week, which Arnold can spend working or pursuing leisure activities. His unearned income,Y, is $50. Note that dULac%3D%3Da. What is the optimality condition (just the formula) for Arnold's utility maximizationproblem?b. Using Arnold's utility function, solve for his optimal labor supply, H*.Ex-Terminator Pest Co. produces dead mice as its output. If they hire an individual to work for Ehours and use K mousetraps, then the number of exterminated mice they produce is Q =F(E, K) = 150 In E + 10 In K. An employee is paid a wage rate of W per hour, and the mousetrapsare rented at R=$2 per trap. They receive a payment of P for each mouse that is killed. Note thatdF /ae = 150/g, dF/akK = 10/K-C. What is the optimality condition (just the formula) for the Ex-Terminator Pest Co.'sprofit maximization problem in the short run?d. Using the company's production function, solve for their choice of optimal lahordemand, E*. (Hint: the answer should be in terms of P and W )a market equilibrium.

(Assume that this is a competitive market.) Arnold gets utility from consumption (C) and leisure (L), according to U(C,L) = In C + In L. His budget constraint is C = WH + Y, where H is the number of hours he works in the week and W is his hourly wage rate. There are 100 total ours in the week, which Arnold can spend working or pursuing leisure activities. His unearned income, %3D %3D Y, is $50. Note that dULac = /c,d0/al = /L- %3D a. What is the optimality condition (just the formula) for Arnold's utility maximization problem?

(Assume that this is a competitive market.) Arnold gets utility from consumption (C) and leisure (L), according to U(C,L) = In C + In L. His budget constraint is C = WH + Y, where H is the number of hours he works in the week and W is his hourly wage rate. There are 100 total ours in the week, which Arnold can spend working or pursuing leisure activities. His unearned income, %3D %3D Y, is $50. Note that dULac = /c,d0/al = /L- %3D a. What is the optimality condition (just the formula) for Arnold's utility maximization problem?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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