MICROECONOMICS Solutions to Problem Set 3 1. (Labour Supply) A worker derives utility from consumption (that is, goods per day), denoted by Y, and leisure, denoted by L: U = U (Y, L) and faces the "bud- get" constraint Y = w (24 - L) (NB: In contrast to the lecture handout, initially the worker has no nonlabour income.) (a) Is w "real" or "nominal" wage?
MICROECONOMICS Solutions to Problem Set 3 1. (Labour Supply) A worker derives utility from consumption (that is, goods per day), denoted by Y, and leisure, denoted by L: U = U (Y, L) and faces the "bud- get" constraint Y = w (24 - L) (NB: In contrast to the lecture handout, initially the worker has no nonlabour income.) (a) Is w "real" or "nominal" wage?
Chapter16: Labor Markets
Section: Chapter Questions
Problem 16.11P
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Transcribed Image Text:MICROECONOMICS
Solutions to Problem Set 3
1. (Labour Supply) A worker derives utility from consumption (that is, goods per
day), denoted by Y, and leisure, denoted by L: U = U (Y, L) and faces the "bud-
get" constraint Y = w (24L) (NB: In contrast to the lecture handout, initially the
worker has no nonlabour income.)
(a) Is w "real" or "nominal" wage?
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