Question: consider the Consider the following Labour-Leisure Choice model. Utility function over consumption (C) and leisure (L) 1 3 U(C,L) = C4L4 Total hours: H =

consider the Consider the following Labour-Leisure Choice model. Utility function over

consider the

Consider the following Labour-Leisure Choice model. Utility function over consumption (C) and leisure (L) 1 3 U(C,L) = C4L4 Total hours: H = 20 Labour hours: N* = H - L Non-labour income: TI = 20 Lump-sum tax: T = 10 Hourly wage: w = 3 Suppose that the hourly wage increases to 5. What is the income effect of this wage change on labour supply(N) )? O A. +1.10 O B. +2.10 O C. -2.10 O D. -1.10 O E. None of the above

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