Question: Consider a labor supply model. The decision maker has utility over leisure L and consumption goods c given by u = 2L + c. They

Consider a labor supply model. The decision maker has utility over leisure L and consumption goods c given by u = 2L + c. They have 10 available hours and no non-labor income. The wage rate is w = 20 and the price per unit of consumption is p = 1.

a) Use the tangency method to find the consumer's optimal choice of L and c. Based on your calculations, if this person had more available hours, would they have worked more, less, or the same number of hours?

b) Say that the situation is the same as before except that after 7 hours of work the wage rate increases from w = 20 to w = 30. Sketch the budget set for this situation on the usual axes, with axes, intercepts, and slopes all labeled.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

QUESTION 1 1.Consider the graph which is attached to the four answers.It shows the preferences and budget constraint of Sheila, who consumes fine meals and Ranger games. Suppose that this person...

Microeconomics homework help me please/ 10. Diamond Coconut Economy with uniform idiosyncratic preferences Time: Discrete, infinite horizon Geography: A trading island and a production island....

my questions Exercise 13.5 (Hard) Tammy lives for two periods. In the first period of life she works ` hours at a wage of w per hour. In the second period of life she is retired and supplies no...

These questions were based on an article that profiled women who were part of a book club, had high levels of education (from elite schools), married men with high earnings, and were on track for...

Question 1 : Labor Supply Decision in a Partial Equilibrium Model Consider a worker who chooses how many hours to work, L , given a fixed wage w and a fixed amount of non - labor income M . The...

Consider a worker-owner model with two goods and two consumers. The worker (consumer 1) has an initial endowment of 10 units of labor time and the utility function uc, l). c+ 281 (1/2)l2, where c> 0...

check on the file and download the...

Purpose: Achieve a good command of endowment, labor supply and intertemporal choice. Truelfalsefuncertain 1. 5" Given an endowment (when), ceteris paribus if the prices of 1:1 and x; double then the...

please answer in respective order please 4. (20) Consider a labor search model with continuous time and an infinite horizon. There are some dif- ferences compared to the baseline DMP model we saw in...

These questions were based on an article that profiled women who were part of a book club, had high levels of education (from elite schools), married men with high earnings, and were on track for...

Blossom Bucket Co., a manufacturer of rain barrels, had the following data for 2019. Sales 2,000 units Sales price $30 Variable costs $18 Fixed costs $11,520 per unit per unit

Show that Z is a standard normal random variable, then, for x > 0, (a) P{Z > x} = P{Z x} = 2P{Z > x}; (c) P{|Z|

Use tne toulowing rinanciai statements ror Lake or tgypt marina, incorporated LAKE OF EGVPT MARINA, INCDFPORATED Calculate the internal and sustainable growth rate for Lake of Egypt Marina,...

QUESTION 11 The following choices about Location Planning are CORRECT EXCEPT O Transportation cost is one of the disadvantages of global locations Import restrictions is one of the disadvantages of...

The geographical location of the sender, i.e. where the sender resides

Subjective norms, i.e. the norms of the target group

The temporal rule: The closer temporal proximity we have to an event or action, the more probable it is that the distortion of information is less than if the event or action happened longer ago.