Question: Consider an individual with the following utility function: U(C,L) = C 1/2 L 1/2 , where C is quantity of consumption and L is hours

  1. Consider an individual with the following utility function: U(C,L) = C1/2L1/2, where C is quantity of consumption and L is hours of leisure in a week.Total time available to allocate between leisure and consumption is 112 hours per week. The individual has non-labor income of $200 per week and an hourly wage of $10. Note that and

  1. What is the marginal rate of substitution of leisure for consumption? (Your answer should be an equation, not a number)

  1. Write down the equation for this individual's budget constraint.

  1. Graph the budget constraint.

  1. Solve for this individual's optimal level of:
  2. consumption
  3. leisure
  4. hours of work

  1. What is her reservation wage?

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