Assume that a consumer’s satisfaction depends upon leisure (L) and income (Y), so that the utility function is:
 U = 48L + LY – L2
 Let N denote the hours of work by the consumer and W the hourly wage rate. Consequently, Y = WN and L + N = 24.
 If the hourly wage rate is $15 per hour:
 a) What are the utility maximizing hours of leisure, L?
 b) What are the utility maximizing hours of work, N?

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To find the utilitymaximizing hours of leisure L and work N we need to maximize the given utility fu... View the full answer