1. You work at as an economics tutor, which pays $20 per hour. You split the...

 

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1. You work at as an economics tutor, which pays $20 per hour. You split the 24 hours in the between work and leisure. You use your labour earnings, combined with your daily investment income of $175, to purchase consumption goods. You value consumption and leisure according to the following utility function: U = c/%L2/3, so MRS = 4. (a) [5 pts] How may hours per day will you choose to work? What will be your level of utility? Illustrate your answer with a carefully labelled graph. (b) [5 pts] Suppose you have a child, and you need to pay a fixed cost of $100 per day in child care in order to work any number of hours. How many hours per day will you choose to work now, and what will be your level of utility? Illustrate your answer with a carefully labelled graph. (c) [5 pts] The government offers a wage subsidy for working parents. For every dollar earned, the government will provide a subsidy of $1 to the working parent. Now, how many hours per day will you choose to work, and what will be your level of utility? Illustrate your answer with a carefully labelled graph. (b) [5 pts] Suppose you have a child, and you need to pay a fixed cost of $100 per day in child care in order to work any number of hours. How many hours per day will you choose to work now, and what will be your level of utility? Illustrate your answer with a carefully labelled graph. 1. You work at as an economics tutor, which pays $20 per hour. You split the 24 hours in the between work and leisure. You use your labour earnings, combined with your daily investment income of $175, to purchase consumption goods. You value consumption and leisure according to the following utility function: U = c/%L2/3, so MRS = 4. (a) [5 pts] How may hours per day will you choose to work? What will be your level of utility? Illustrate your answer with a carefully labelled graph. (b) [5 pts] Suppose you have a child, and you need to pay a fixed cost of $100 per day in child care in order to work any number of hours. How many hours per day will you choose to work now, and what will be your level of utility? Illustrate your answer with a carefully labelled graph. (c) [5 pts] The government offers a wage subsidy for working parents. For every dollar earned, the government will provide a subsidy of $1 to the working parent. Now, how many hours per day will you choose to work, and what will be your level of utility? Illustrate your answer with a carefully labelled graph. (b) [5 pts] Suppose you have a child, and you need to pay a fixed cost of $100 per day in child care in order to work any number of hours. How many hours per day will you choose to work now, and what will be your level of utility? Illustrate your answer with a carefully labelled graph.

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