Question 3: Shelly's preferences for consumption and leisure can be expressed as: U(C, L) = (C-200) × (L-80) This utility function implies that Shelly's marginal utility of leisure is C -200 and her marginal utility of consumption is L- 80. There are 168 hours in the week available to split between work and leisure. Shelly earns $5 per hour after taxes. She also receives $320 worth of welfare benefits each week regardless of how much she works. (a): Graph Shelly's budget constraint. (b): What is Shelly's marginal rate of substitution when L=100 and she is on her budget line?

Question 3: Shelly's preferences for consumption and leisure can be expressed as: U(C, L) = (C-200) × (L-80) This utility function implies that Shelly's marginal utility of leisure is C -200 and her marginal utility of consumption is L- 80. There are 168 hours in the week available to split between work and leisure. Shelly earns $5 per hour after taxes. She also receives $320 worth of welfare benefits each week regardless of how much she works. (a): Graph Shelly's budget constraint. (b): What is Shelly's marginal rate of substitution when L=100 and she is on her budget line?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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