There are 24 hours in a day, and Jacob allocates time between hours worked (H) and leisure (N). When he works at his job, he earns $20 per hour. He gets utility from consumption (x) and leisure:u=u(x, N). He buys goods to consume using money earned from his job. Given that his preferences are strictly well-behaved, a)Write a single equation for Jacob's budget constraint. b)There is a change at Jacob's workplace: His working hours are limited to 6 hours per day or fewer. Draw this constraint and explain the effects of this change on his choices and his utility. c) Jacob, bound to 6 hours or fewer at his workplace, finds that he can earn $10 per hour if he works as an undertaker. He can do this as many hours as he wants. However, the trade off is that he cannot multitask.

There are 24 hours in a day, and Jacob allocates time between hours worked (H) and leisure (N). When he works at his job, he earns $20 per hour. He gets utility from consumption (x) and leisure:u=u(x, N). He buys goods to consume using money earned from his job. Given that his preferences are strictly well-behaved, a)Write a single equation for Jacob's budget constraint. b)There is a change at Jacob's workplace: His working hours are limited to 6 hours per day or fewer. Draw this constraint and explain the effects of this change on his choices and his utility. c) Jacob, bound to 6 hours or fewer at his workplace, finds that he can earn $10 per hour if he works as an undertaker. He can do this as many hours as he wants. However, the trade off is that he cannot multitask.

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Description: There are 24 hours in a day, and Jacob allocates time between hours worked (H) and leisure(N). When he works at his job, he earns $20 per hour. He gets utility from consumption (x)and leisure:u=u(x, N). He buys goods to consume using money earned fr

Advanced Engineering Mathematics

10th Edition

ISBN:9780470458365

Author:Erwin Kreyszig

Publisher:Erwin Kreyszig

Chapter2: Second-order Linear Odes

Section: Chapter Questions

Problem 1RQ

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Question

There are 24 hours in a day, and Jacob allocates time between hours worked (H) and leisure
(N). When he works at his job, he earns $20 per hour. He gets utility from consumption (x)
and leisure:u=u(x, N). He buys goods to consume using money earned from his job. Given that
his preferences are strictly well-behaved,
a)Write a single equation for Jacob's budget constraint.
b)There is a change at Jacob's workplace: His working hours are limited to 6 hours per day or
fewer. Draw this constraint and explain the effects of this change on his choices and his utility.
c) Jacob, bound to 6 hours or fewer at his workplace, finds that he can earn $10 per hour if he
works as an undertaker. He can do this as many hours as he wants. However, the trade off is
that he cannot multitask.
(i) Write and draw his new overall budget constraint.
(ii) How might or might not his work choice change?How about his utility? Why?
d)How would your answer to part (c) be different if undertaking earned him $30 per hour
instead?

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