Fill in the blanks and round to 2 decimals where needed. Katie has 75 hours per week to allocate to leisure or work. She has a job that pays $30 per hour, she has $150 nonlabour income per week and the price of the (composite) consumption good is p=$1. Her preferences are given by U(C,L) = 1½ C L. Katie's reservation wage is $ 30 and she prefers to work 87.5 hours per week. If Katie's nonlabour income rises to $210, she would prefer to work 68 hours per week. If Katie's hourly wage was to rise to $40, she would prefer to work 72 hours per week (with the original Yn=150). Considering the change in hours in response to the wage rise, the effect clearly dominates the effect.

Fill in the blanks and round to 2 decimals where needed. Katie has 75 hours per week to allocate to leisure or work. She has a job that pays $30 per hour, she has $150 nonlabour income per week and the price of the (composite) consumption good is p=$1. Her preferences are given by U(C,L) = 1½ C L. Katie's reservation wage is $ 30 and she prefers to work 87.5 hours per week. If Katie's nonlabour income rises to $210, she would prefer to work 68 hours per week. If Katie's hourly wage was to rise to $40, she would prefer to work 72 hours per week (with the original Yn=150). Considering the change in hours in response to the wage rise, the effect clearly dominates the effect.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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