The consumer choice is not restricted to the choice of consumption goods. In fact, it can apply to all our decisions that involve trade-offs. Suppose Mary has a wage per hour of 10 euros. With her earned income she consumes. That is, C = wH per day. She also decides how many hours to work of take leisure time each day. H = 24 ́- N, where H is work and N is leisure. Her utility is given by U(C,N) = ((C^1-a) / 1-a) +B logN (a) Solve for the optimal decision of labor/leisure. Plot the budget constraint and the indif- ferent curve. What is the labor supply function?
The consumer choice is not restricted to the choice of consumption goods. In fact, it can apply to all our decisions that involve trade-offs. Suppose Mary has a wage per hour of 10 euros. With her earned income she consumes. That is, C = wH per day. She also decides how many hours to work of take leisure time each day. H = 24 ́- N, where H is work and N is leisure. Her utility is given by U(C,N) = ((C^1-a) / 1-a) +B logN (a) Solve for the optimal decision of labor/leisure. Plot the budget constraint and the indif- ferent curve. What is the labor supply function?
Calculus: Early Transcendentals
8th Edition
ISBN:9781285741550
Author:James Stewart
Publisher:James Stewart
Chapter1: Functions And Models
Section: Chapter Questions
Problem 1RCC: (a) What is a function? What are its domain and range? (b) What is the graph of a function? (c) How...
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The consumer choice is not restricted to the choice of consumption goods. In fact, it can apply
to all our decisions that involve trade-offs. Suppose Mary has a wage per hour of 10 euros.
With her earned income she consumes. That is, C = wH per day. She also decides how many
hours to work of take leisure time each day. H = 24 ́- N, where H is work and N is leisure.
Her utility is given by
U(C,N) = ((C^1-a) / 1-a) +B logN
(a) Solve for the optimal decision of labor/leisure. Plot the budget constraint and the indif-
ferent curve. What is the labor supply function?
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