1. The individual's utility function has the following form: U(C,L) = 5+ Chi Here C indicates the consumption good and L the leisure. The individual has non-labour income R and Lo hours that can be used to work (h) or leisure. P = l is the numeraire. (a) Derive the Marshallian labour supply 11*. (b) Derive the Marshallian elasticity of labour supply with respect to wages am. (Note: this is a function of w, h and R) (c) Derive the Hicksian labour supply ll. (d) Derive the Hicksian elasticity of labour supply with respect to wages on. (Note: this is a function of w, h and U) (e) Assuming that w = 1, R = 8 and L0 = 24: I Calculate the values of h' and fa (Hint: to do so, calculate before the optimal level of expenditure and of the utility.) What do you notice? I Calculate the values of 17M and rm; comment and compare the sizes of the elasticities I Verify that the Slutsky equation holds (recalling that 133.; = 1m + rm)