1) Yaron spends his time (18h) between leisure (L) and work and he consume Y product...

 

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1) Yaron spends his time (18h) between leisure (L) and work and he consume Y product from his working income (Py=1). Assume that Yaron gets W$ per hour of working and has the following utility function: U(L,Y)=Lo.5 +Yo.5 a. (6) Calculate the demand function for L and show it on a graph (L vs W). b. (6) Calculate the labor supply (H) and show it on a graph (H vs W). c. (7) What will happen to L, Y and H if the wage per hour (W) will increase? d. (8) How would your answer to the previous question (c) will change if the consumer has a fixed amount of money (Wo) that is not connected to W? e. (5) If Yaron has the following utility function: U= L+ Yo.s, is it possible that he will choose not to work at all? Explain. No calculation needed. 1) Yaron spends his time (18h) between leisure (L) and work and he consume Y product from his working income (Py=1). Assume that Yaron gets W$ per hour of working and has the following utility function: U(L,Y)=Lo.5 +Yo.5 a. (6) Calculate the demand function for L and show it on a graph (L vs W). b. (6) Calculate the labor supply (H) and show it on a graph (H vs W). c. (7) What will happen to L, Y and H if the wage per hour (W) will increase? d. (8) How would your answer to the previous question (c) will change if the consumer has a fixed amount of money (Wo) that is not connected to W? e. (5) If Yaron has the following utility function: U= L+ Yo.s, is it possible that he will choose not to work at all? Explain. No calculation needed.

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