Question: 5 . Phoebes utility function is given by U ( L , C ) = C ( L + 8 ) . There are 1

5. Phoebes utility function is given by U(L, C)= C(L+8). There are 16 hour in a day. Her wage as a server is $10/hr. and she gets $40 non-labor income from playing her guitar. (1 point each)a. Find the budget constraint and then the optimal number of hours she should spend in Leisure (L). b. Is it possible for Phoebe to consume $100 and have 12 hours of leisure? Explain. c. If the wage changed to $5/hr would Phoebe work more or less? Are Leisure and Consumption gross complements or substitutes? d. Using the optimal amount of work from parts a and c, what is the elasticity of Phoebes labor supply? Is her labor supply elastic?

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