Assume that a consumers satisfaction depends upon leisure (L) and income (Y), so that the utility function
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Question:
Assume that a consumer’s satisfaction depends upon leisure (L) and income (Y), so that the utility function is:
U = 48L + LY – L2
Let N denote the hours of work by the consumer and W the hourly wage rate. Consequently, Y = WN and L + N = 24.
If the hourly wage rate is $15 per hour:
a) What are the utility maximizing hours of leisure, L?
b) What are the utility maximizing hours of work, N?
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
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