Question: Consider a one - period static consumption - leisure model. Suppose the individual has the following utility function over consumption c and leisure l :
Consider a oneperiod static consumptionleisure model. Suppose the individual has the following utility function over consumption and leisure : The individual budget constraint given : where the tax rate, the real hourly wage rate, and the number hours worked. The total available time normalized Set the Lagrangian for the problem. Verify that the consumptionleisure optimality condition equal the negative slope the budget constraint. Solve for the optimal values leisure, labor, and consumption.
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