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Suppose that the utility function is u(c, l) utility function. = call-a, where 0 < a < 1 is the parameter of the (a) Please find the goods demand function c(w, d, T), leisure demand function (w, d, T), and the labor supply function ns (w, d, T). Note that these three functions contain the parameter a. Are both c and normal goods for this consumer? Explain. Hint: uc = aca-111-a a, and u₁ = (1-a)cal-a (b) Let a = 1/3 and d - T = 3. Plot c(w, d, T) and ns (w, d,T) curves you find in (a). Explain the effects on c(w, d, T) and n³ (w, d, T) if d - T rises to 6. Hint: use w = 12, 48, 96, 192, 384 to find points on the curves, and draw the curves by linking these points.

Suppose that the utility function is u(c, l) utility function. = call-a, where 0 < a < 1 is the parameter of the (a) Please find the goods demand function c(w, d, T), leisure demand function (w, d, T), and the labor supply function ns (w, d, T). Note that these three functions contain the parameter a. Are both c and normal goods for this consumer? Explain. Hint: uc = aca-111-a a, and u₁ = (1-a)cal-a (b) Let a = 1/3 and d - T = 3. Plot c(w, d, T) and ns (w, d,T) curves you find in (a). Explain the effects on c(w, d, T) and n³ (w, d, T) if d - T rises to 6. Hint: use w = 12, 48, 96, 192, 384 to find points on the curves, and draw the curves by linking these points.

Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter4: Utility Maximization And Choice
Section: Chapter Questions
Problem 4.13P
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Suppose that the utility function is u(c, l) utility function. = call-a, where 0 < a < 1 is the parameter of the (a) Please find the goods demand function c(w, d, T), leisure demand function (w, d, T), and the labor supply function ns (w, d, T). Note that these three functions contain the parameter a. Are both c and normal goods for this consumer? Explain. Hint: uc = aca-111-a a, and u₁ = (1-a)cal-a (b) Let a = 1/3 and d - T = 3. Plot c(w, d, T) and ns (w, d,T) curves you find in (a). Explain the effects on c(w, d, T) and n³ (w, d, T) if d - T rises to 6. Hint: use w = 12, 48, 96, 192, 384 to find points on the curves, and draw the curves by linking these points.
Transcribed Image Text:Suppose that the utility function is u(c, l) utility function. = call-a, where 0 < a < 1 is the parameter of the (a) Please find the goods demand function c(w, d, T), leisure demand function (w, d, T), and the labor supply function ns (w, d, T). Note that these three functions contain the parameter a. Are both c and normal goods for this consumer? Explain. Hint: uc = aca-111-a a, and u₁ = (1-a)cal-a (b) Let a = 1/3 and d - T = 3. Plot c(w, d, T) and ns (w, d,T) curves you find in (a). Explain the effects on c(w, d, T) and n³ (w, d, T) if d - T rises to 6. Hint: use w = 12, 48, 96, 192, 384 to find points on the curves, and draw the curves by linking these points.
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