Question 5Suppose that a representative consumer has the following utility function for leisure I and consumptionC.U(L, C) = C³/4 1\/4The real wage rate, w, is competitively determined to be 10. The number of hours, h, available to theconsumer is 24. The profits, t, distributed to each consumer are 200 and taxes, T, are lump sum at 100.a). Given the above, how much leisure would the consumer choose?b) Given the above, how much consumption would the consumer choose?c) Given the above, how many units of time will the consumer spend working?Question 6Describe, briefly and in your own words, what total factor productivity means. Provide an example of achange in TFP.Question 7What is the firm's profit maximizing condition, assuming that its capital is fixed? Briefly discuss, inyour own words, intuitively what this condition means.

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Answered: Question 5 Suppose that a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. Consider the economic model of an individual's labor-leisure choice with the following components: C represents units of the consumption good L represents hours of leisure H represents hours of paid work p represents the unit price of the consumption good w represents the hourly wage rate Y represents nonlabor income T represents total time available U(C, L) represents the individual's utility function MUC denotes the marginal utility of consumption MUL denotes the marginal utility of leisure Unless otherwise instructed, assume that consumption and leisure are normal goods. Whenever graphi the model, put C on the vertical axis and L on the horizontal axis. What is the slope of the budget line? -(MUC/MUL) O-(MUL/MUC) O-W O -(w/p) O-(w+Y)/p
You currently work for 40 hours a week at wage rate of £12 an hour. Your free hours are defined as the number of hours not in work, which in this case is 24 hours × 7 days – 40 hours = 128 hours per week. Suppose that you are happy to keep your total weekly income constant. Then: To have 12.5% more free time, your wage rate needs to increase by £8. Doubling the wage rate would decrease your working hours by a third. If your wage rate increases to £16 an hour, then your free time will increase by 6%. A wage cut of 25% leaves you with only 100 hours of free time.
An individual can earn $12 per hour if he or she works. Assume that a person can work at most 24 hours per day times 30 days per month for a total of 720 hours. Thus, the axis intercepts, in the absence of any program, are 720 x $12 = $8,640 in consumption and 720 hours of leisure. Scenario: Suppose that a new welfare program is introduced where the government guarantees $600 per month in income and reduces the benefit by $1 for each $1 of labor income. Below are the budget constraints that show the monthly income-leisure trade-off. Monthly income $8,640 $600 720 Leisure (hours) With 40% reduction rate, when he/she works 30 hours, where will he/she maximize his/her utility? O A. Point B O B. Point C O C. Point D O D. Point F
In any given week, Anne receives satisfaction only from the consumption of goods and from the consumption of leisure L, which is measured in hours. Obviously, Anne consumes many different types of goods, but for simplicity we aggregate the dollar value of all the goods that she consumes during the week and call it C. Assume that if Anne chooses to work, the hourly wage rate is w=9 and she has to sleep 8 hours per day. (Sleeping time is not considered leisure.) Potentially, if she wants, she can work up to 7 days a week.
James has a wage income of $50.000 in the present and $200.000 in the future. His utility is given as U = min (2Cp, Cr) - that is, his utility is the lesser of twice the dollars spent on present consumption or the dollars spent on future consumption. The interest rate is 30%. (A) What is the minimum amount of money James would be willing to accept today to have the interest rate at 40% rather than 30%? Explain and show work (B) What is the maximum amount of money James would pay today to have the interest rate at 30% rather than 40%? Explain and show work
Can you please help solve question 10 a,b and c please show full working so I can compare it to my own work Thank you
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.
Can you help me with part b please?

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