Question: An individual has utility function . The person has no non-labor income and 100 hours per week to use on leisure or work. Suppose the

An individual has utility function . The person has no non-labor income and 100 hours per week to use on leisure or work. Suppose the wage is $20 per hour.

a. How many hours per week will this person work?

b. The wage increases from $20 to $25. How much will labor supply change? What is the substitution and income effect?

The income effect and sub effect will cancel each other out at CL (constant)

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