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The utility maximization condition for the consumer is. Choose the correct one. MRSLC = -1 MRSL,C = W MRSIC=Y/L OMRSLc = 1/w

The utility maximization condition for the consumer is. Choose the correct one. MRSLC = -1 MRSL,C = W MRSIC=Y/L OMRSLc = 1/w

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The utility maximization condition for the consumer is. Choose the correct one. MRSLC = 17-1 MRSL,C = w MRSLC = Y/1 MRSLC = 1/w
Transcribed Image Text:The utility maximization condition for the consumer is. Choose the correct one. MRSLC = 17-1 MRSL,C = w MRSLC = Y/1 MRSLC = 1/w
This problem considers the decisions of a consumer whose preferences are given by u(C, 1) = C + y log 1, in which is the quantity of consumption and I is the quantity of leisure. The consumer faces two constraints. The time constraint is given by 1 + N = 1 with N³ as the time spent working (or the labor supply). Assume that 0 < x < 1. The main advantage of working is the wages consumers receive. Consumers take wages as given (outside of their control) and obtain wage income equal to w Nº. The budget constraint is C = wN+T-T, with as real dividend income and T as the real lump-sum taxes paid to government. Assume that an interior solution always exists in the optimal consumption-leisure choice.
Transcribed Image Text:This problem considers the decisions of a consumer whose preferences are given by u(C, 1) = C + y log 1, in which is the quantity of consumption and I is the quantity of leisure. The consumer faces two constraints. The time constraint is given by 1 + N = 1 with N³ as the time spent working (or the labor supply). Assume that 0 < x < 1. The main advantage of working is the wages consumers receive. Consumers take wages as given (outside of their control) and obtain wage income equal to w Nº. The budget constraint is C = wN+T-T, with as real dividend income and T as the real lump-sum taxes paid to government. Assume that an interior solution always exists in the optimal consumption-leisure choice.
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