Question: Assume that a worker has the Utility Function U(C,L) = CL C refers to consumption in dollars and L to hours of leisure in a

Assume that a worker has the Utility Function U(C,L) = CL

"C" refers to consumption in dollars and "L" to hours of leisure in a day. The worker has an offered wage of $10 per hour, 16 hours available for leisure or work per day, and $80 dollars a day from non-labour income.

a) Find the budget constraint equation of the individual. b) Find the optimal choice for the individual in terms of units of leisure and income,

the number of hours worked and the utility obtained.

b) Find the supply equation of the individual. e) Calculate the reservation wage and briefly explain the definition.

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