An individual has the following preferences defined over consumption of a composite good c (with a...

 

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An individual has the following preferences defined over consumption of a composite good c (with a per unit price p normalized to 1) and leisure h 20 measured in hours: U=h1/3 c2/3. Her total daily time constraint is H = 24 =h+1 hours (where 120 denotes her labor supply in hours) and her daily non-labor income is y = $480. Answer each of the following questions based on the above information. Round your FINAL numerical answers to the nearest 2nd decimal place (0.01). a). Assuming the hourly wage is w = $5, calculate this individual's daily consumption of leisure, h. b). Again, assuming the hourly wage is w = $5, calculate her daily consumption of the composite good, c. c). Assuming the hourly wage is w = $15, calculate this individual's daily consumption of leisure, h. d). Again assuming the hourly wage is w= $15, calculate this individual's daily consumption of the composite good c. e). Calculate the threshold level of the wage, above which she would work (1> 0) or (h<H = 24). f). Is she happier when the going wage is lower (e.g., $5) or higher (e.g., $15)? A. When the wage is higher. B. When the wage is lower. An individual has the following preferences defined over consumption of a composite good c (with a per unit price p normalized to 1) and leisure h 20 measured in hours: U=h1/3 c2/3. Her total daily time constraint is H = 24 =h+1 hours (where 120 denotes her labor supply in hours) and her daily non-labor income is y = $480. Answer each of the following questions based on the above information. Round your FINAL numerical answers to the nearest 2nd decimal place (0.01). a). Assuming the hourly wage is w = $5, calculate this individual's daily consumption of leisure, h. b). Again, assuming the hourly wage is w = $5, calculate her daily consumption of the composite good, c. c). Assuming the hourly wage is w = $15, calculate this individual's daily consumption of leisure, h. d). Again assuming the hourly wage is w= $15, calculate this individual's daily consumption of the composite good c. e). Calculate the threshold level of the wage, above which she would work (1> 0) or (h<H = 24). f). Is she happier when the going wage is lower (e.g., $5) or higher (e.g., $15)? A. When the wage is higher. B. When the wage is lower.

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A When the hourly wage is w 5 the individuals daily consumption of leisure h can be calculated by setting up and solving the budget constraint equatio... View the full answer