Question: Consider a utility function:U(c,l)=(1)log(c)+log(l),where >0. the consumer has one unit of time,w= 0.75,= 0.8, andT= 1.0. Determine the consumer's optimal choice of consumption and leisure,

Consider a utility function:U(c,l)=(1)log(c)+log(l),where >0.

  1. the consumer has one unit of time,w= 0.75,= 0.8, andT= 1.0. Determine the consumer's optimal choice of consumption and leisure, and show this in a diagram.
  2. suppose w= 1.5. determine the consumer's optimal choice of consumption and leisure. Use a graph to show how and why the consumer's optimal consumption bundle changes, with reference to income and substitution effects.

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!

Q:

1As in the Hong Kong tax code, we can think of the representative consumer faces a wage income tax with a standard deduction. That is, the representative consumer pay no tax on wage income for the...

Q:

Consider a utility function: U (c,`) = (1)log(c) + log(`), where > 0. (a) Suppose that the consumer has one unit of time, w = 0.75, = 0.8, and T = 1.0. Determine the consumer's optimal choice of...

Q:

Question 7. Consider a utility function:U(c,l) = (1) log (c) +log (l), where >0. (a) Suppose that the consumer has one unit of time,w= 0.75,= 0.8, and T= 1.0. Determine the consumer's optimal choice...

Q:

Consider a utility function:U(c,l) = (1) log (c) +log (l), where >0. (a) Suppose that the consumer has one unit of time,w= 0.75,= 0.8, and T= 1.0. Determine the consumer's optimal choice of...

Q:

Please answer all questions with explanations Consumer Choice Model 1. Elizabeth has the following utility function for goods X and Y: U =X Y. Her income is $300 per unit of time, the price of X...

Q:

A ttempt the questions below... Ve = cosOv, + sin 0 v2 Vu =-sin 0 v1 + cos0 v2 After being produced, a neutrino travels freely with a definite energy and momentum, therefore its wavefunction is...

Q:

We are going to imagine that a worker has the preferences U(c,l) =a(c)+'v[l) (9.1.1) where c stands for consumption and 5 stands for leisure. The function u. (c) describes how much the worker enjoys...

Q:

ANSWER ALL QUESTIONS AND SHOW YOUR WORK Good review if it is accurate and fully answered! QUESTION 8 Consider a Solow growth model where n=0, s=0.2, d=0.1, and F(K,N)=K^0.3*N^0.7. Suppose that...

Q:

acc On January 1st. 2017, X Company bought 80% of the outstanding common shares of the Y Company for $140,000 cash. On that date Y Company had $50,000 of common shares outstanding and $60,000...

Q:

kindly 1- Consider a couple consisting of a husband {H} and wife {H ]. Each is endowed with one unit of time which has three possible uses: market production {m}; home production {31:}. and leisure...

Q:

A container ship traveled to dry dock and back. It took two hours longer to go there than it did to come back. The average speed on the trip there was 6mph. The average speed on the way back was 10...

Q:

How does an installment note differ from a note for which the principal is paid as a single amount at maturity?

Q:

Fil in the bianis in the following separate income sratements a through e . \ table [ [ , 3 , , , , 5 , , d , cdots

Q:

If a utilization rating of 7 0 % or higher is considered to be minimally acceptable, which employees have less than minimally acceptable utilization? A Employees A and B B Employees B and E C...

Q:

How do your personality traits affect your teamwork and decision-making style and your interest and ability to participate in group decision-making?

Q:

Is following the steps in the decision-making model really all that important? Which steps of the model do you tend to follow? Which steps do you tend to not use? Will you use the model in your...

Q:

Are creativity and innovation really that important to all types of businesses?