Question: 4. Suppose that an individual's utility function for consumption, C, and leisure, L, is given by U(CL) = 0.5 0.5 This person is constrained by

4. Suppose that an individual's utility function for consumption, C, and leisure, L, is given by U(CL) = 0.5 0.5 This person is constrained by two equations: (1) an income constraint that shows how con- sumption can be financed, C = WH +V In working following parts it is important not to impose the V = 0 condition until after taking all derivatives. (a) Assume V 70, determine uncompensated supply function for labor and compare with the compensated labor supply function from part (c). (e) Determine maximum utility, U, using the expenditure function derived in part (a), assume V = E, (f) Use the Slutsky equation to show that income and substitution effects of a change in the real wage cancel out

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