Consider a person who like consumption (C) and dislikes labor (N) in this way: U = In(C) - N This is a one-period model of course. The person gets to consume by earning wages and by getting a "national dividend" (D) from the government. To keep it simple, we'll assume that one hour of work yields an one extra unit of the consumption good. C=N+D This person maximizes utility subject to the above budget constraint. Question: For this person, if the national dividend (D) rises by one unit, how much does total consumption (C) change as a result? In other words, what is dC*/dD for this person?

Consider a person who like consumption (C) and dislikes labor (N) in this way: U = In(C) - N This is a one-period model of course. The person gets to consume by earning wages and by getting a "national dividend" (D) from the government. To keep it simple, we'll assume that one hour of work yields an one extra unit of the consumption good. C=N+D This person maximizes utility subject to the above budget constraint. Question: For this person, if the national dividend (D) rises by one unit, how much does total consumption (C) change as a result? In other words, what is dC*/dD for this person?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Find the utility-maximising levels of consumption and leisure. How much labour does the consumer - worker’s supply?
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