Imagine a consumer - worker who has a total time endowment of T = 100 hoursper week. He/She can use these hours for work or for leisure. All the moneythat he/she will gain from the work will use for consumption.The Utility Function isU=C1/2 R¹/2where C is consumption of consumer goods and R is consumption of leisure.The wage rate is £20 per hour, and the price of consumer goods is £1.Hours of labour supplied are denoted by L, where L = T - R.Find the utility-maximising levels of consumption and leisure. How muchlabour does the consumer - worker's supply?

Imagine a consumer - worker who has a total time endowment of T=100 hours per week. He/She can use these hours for work or for leisure. All the money that he/she will gain from the work will use for consumption. The Utility Function is

Imagine a consumer - worker who has a total time endowment of T=100 hours per week. He/She can use these hours for work or for leisure. All the money that he/she will gain from the work will use for consumption. The Utility Function is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Refer to the following diagram. Point A is 24 hours, C is 14 hours, D is 8 hours, and E is 6 hours. Income B₂ 0 D -Leisure If the current wage rate results in a budget constraint of AB2, how many hours will the individual work?
The utility of Amanda for leisure (L) and income (Y) is U = LY. The price of income is 1. If Amanda uses her spare L hours a day, (24 - L) hours will be labored. Since wages are w, the daily income is (24 - L). If the wages are positive, show that the optimal number of leisure hours that Amanda will use will always be the same. How much leisure time does Amanda demand and how much work time do she want to provide?
Consider a representative consumer with preferences over consumption e and leisure I given by u(e,l) = 1/4 * ln(c) + 3/4 * ln(l) Assume that the price of consumption is normalized to p = 1 and the consumer has h = 24 hours of total time available to divide between work and leisure. The consumer's wage per hour of work is w = 24 The consumer also receives dividend (profit) income of pi = 39 and pays lump-sum taxes of T = 7 (a) Write out the consumer's budget equation, and draw a graph of the budget constraint. (b) Solve for the optimal decisions e and 1. How many hours per day is the consumer working? (c) Suppose the consumer's wage decreases to w = 16 Solve for the new optimal choices of c and I". Relative to the solution in part (b), do consumption, leisure, and hours worked increase, decrease, or stay the same? Give an intuitive explanation for why these changes occur. (d) When the wage changes in part e, determine whether the consumer experiences an income effect, a substitution…
Consider a worker who consumes one good and has a preference for leisure. She maximizes the utility function u(x, L) = xL, where a represents consumption of the good and L represents leisure. Suppose that this worker can choose any L = [0, 1], and receives income w(1 L); w represents the wage rate. Let p denote the price of the consumption good. In addition to her wage income, the worker also has a fixed income of y ≥ 0. (a) Write down the utility maximization problem for this consumer. (b) Find the Marshallian demands for the consumption good and leisure. (c) Find the indirect utility as a function of p, w, and y.
Find the marginal utility of an additional unit of good z for a consumer with utility function u (a, y) = zi yi when their current consumption level is 2 and y = 16.