Consider 5 workers who care about their consumption and continuous job satisfaction J. Their preferences are described by the utility function U(C,J) = 2C + J. There are 5 firms that are producing the output using the production function Q(J,L) = L √ 20 − J 1. What are the marginal rate of substitution between consumption and job satisfaction and the marginal rate of transformation between wages and job satisfaction? 2. What are the equilibrium levels of wage and job satisfaction? 3. What is the slope of the wage-job satisfaction locus?
Consider 5 workers who care about their consumption and continuous job satisfaction J. Their preferences are described by the utility function U(C,J) = 2C + J. There are 5 firms that are producing the output using the production function Q(J,L) = L √ 20 − J 1. What are the marginal rate of substitution between consumption and job satisfaction and the marginal rate of transformation between wages and job satisfaction? 2. What are the equilibrium levels of wage and job satisfaction? 3. What is the slope of the wage-job satisfaction locus?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider 5 workers who care about their consumption and continuous job satisfaction J.
Their preferences are described by the utility function U(C,J) = 2C + J. There are 5 firms that
are producing the output using the production function Q(J,L) = L
√
20 − J
1. What are the marginal rate of substitution between consumption and job satisfaction and
the marginal rate of transformation between wages and job satisfaction?
2. What are the equilibrium levels of wage and job satisfaction?
3. What is the slope of the wage-job satisfaction locus?
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