Consider an economy with two goods, consumption c and leisure l, and a representative consumer. The...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Consider an economy with two goods, consumption c and leisure l, and a representative consumer. The consumer is endowed with 24 hours of time in a day. A consumer's daily leisure hours are equal tol = 24 – h where h is the number of hours a day the consumer chooses to work. The price of consumption p is equal to 1 and the consumer's hourly wage is w. The consumer faces an ad valorem tax on their earnings of T percent. The consumer also receives some exogenous income Y that does not depend on how many hours she works (e.g. an inheritance). The consumer's preferences over consumption and hl+ hours of work can be represented by the utility function U(c, h) = c - 1+ (a) What is this consumer's budget constraint? (b) Solve for the consumer's utility maximizing hours of work h*(w, 1- T, Y) and con- sumption c*(w,1– 1, Y). (c) Repeat part (b) for a consumer with the utility function U (c, h) = alog(c)- Blog(h). Consider an economy with two goods, consumption c and leisure l, and a representative consumer. The consumer is endowed with 24 hours of time in a day. A consumer's daily leisure hours are equal tol = 24 – h where h is the number of hours a day the consumer chooses to work. The price of consumption p is equal to 1 and the consumer's hourly wage is w. The consumer faces an ad valorem tax on their earnings of T percent. The consumer also receives some exogenous income Y that does not depend on how many hours she works (e.g. an inheritance). The consumer's preferences over consumption and hl+ hours of work can be represented by the utility function U(c, h) = c - 1+ (a) What is this consumer's budget constraint? (b) Solve for the consumer's utility maximizing hours of work h*(w, 1- T, Y) and con- sumption c*(w,1– 1, Y). (c) Repeat part (b) for a consumer with the utility function U (c, h) = alog(c)- Blog(h).
Expert Answer:
Answer rating: 100% (QA)
a Budget constraint will be c w1th 24Y where I am taking ... View the full answer
Posted Date:
Students also viewed these economics questions
-
A linear dynamical system can be represented by the equations Dx / dt = A(t)x(t) + B(t)u(t), y(t) = C(t)x(t) + D(t)u(t), where A is an n n variable matrix, B is an n r variable matrix, C is an m n...
-
A satellite single-axis attitude control system can be represented by the block diagram in Figure CP2.5. The variables k, a, and b are controller parameters, and J is the spacecraft moment of...
-
A system can be represented by the state vector differential equation of Equation (3.16), where Find the characteristic roots of the system. 2 0
-
Let z(k) denote the k-year continuously compounded zero-coupon yield for the current term structure. You are given that z(1) = 0.035, z(2) = 0.041, z(3) = 0.045, z(4) = 0.049, z(5) = 0.051, z(6) =...
-
How did the U.S. secondary mortgage markets evolve?
-
Surely animals, humans, and computers cannot be intelligentthey can do only what their constituent atoms are told to do by the laws of physics. Is the latter statement true, and does it imply the...
-
A cost sheet and partial finished goods ledger card for Leather Originals, a manufacturer of leather furniture, are provided in the Working Papers. Work independently to complete the following...
-
Hartford Jewelers had the following purchase transactions. Journalize all necessary transactions. Explanations are not required. Jun. 20 Purchased inventory of $5,400 on account from Surry Diamonds,...
-
In this discussion, explore and share relative values you believe are important for criminal justice (CJ) professionals in order to embrace, follow, and resolve intrapersonal conflict.
-
A mechanical engineer at Anode Metals is considering five equivalent projects, some of which have different life expectations. Salvage value is nil for all alternatives. Assuming that the companys...
-
Four factors directly influence an employee's voluntary behavior and performance - motivation, ability, role perceptions, and situational contingencies/factors. As an employer how would you use the...
-
Post makes several varieties of cereals. In promoting this product line, Post offers a 50-cents-off coupon that can be used to purchase any of its cereals. What type of discount is this?
-
1. What makes a good manager/leader in opinion? List out at-least five traits 2. Why do think there are very bad managers other than they are just not trained? Be specific 3. What traits or qualities...
-
Consider an industry, a particular company, or a business you would like to start on your own. 1) What or whom would a company need to research in order to creAte an effective advertisement for the...
-
Thomas is a manager who makes decisions quickly. He likes to make decisions on the spot, even if he does not have all of the necessary information. What type of decision - making style is Thomas...
-
4. Solve the material balances for the unknown flow rates, S through S4, in moles/min. CO Balance: 1 mole + 0.08000 S3 = 0.07522-S + 0.00880-S4 SO Balance: N Balance: 0+ 0.02000-S3 = 0.01651 S +...
-
1 0 y - 1 4 = 1 4 y - 2 0
-
Using the information presented in Problem 13.4B, prepare a partial statement of cash flows for the current year, showing the computation of net cash flows from operating activities using the...
-
Purple Company has a current ratio of 2.2 on December 31. On that date its current assets are as follows: Purple Company's current liabilities at the beginning of the year were \(\$ 195,000\) and...
-
The following information is available for Virginia Company: Calculate the following ratios for 2019: a. Gross profit percentage b. Return on sales c. Asset turnover d. Return on assets e. Return on...
-
Purple Company, whose current assets at December 31 are shown in Exercise E13-6B, had net sales for the year of \(\$ 580,000\) and cost of goods sold of \(\$ 339,000\). At the beginning of the year,...
Study smarter with the SolutionInn App