Question: Please answer this with explanation and calculations if needed!! thank you Consider an economy populated by a representative consumer, that has preferences over leisure ()

Please answer this with explanation and calculations if needed!! thank you

Please answer this with explanation and calculations if needed!! thank you Consider

Consider an economy populated by a representative consumer, that has preferences over leisure () and consumption (c). The consumer's utility function in this one-period model is: u(c, 1 ) = [In(c) + - In(1) The consumer has 1 unit of time (h = 1) at his disposal to spend between leisure and work. With T being a fixed lump-sum tax, # being profits from dividends, and w being wage, the consumer's budget constraint can be written as: ct w= wth-T The representative firm's production function is Y = zK1/2 N1/2 Assume that K = 1, z = 10. (a) Define and Calculate the marginal rate of substitution of leisure for consumption (MRSlc). (b) Show why it is not optimal for the consumer to choose the allocation c = 5 and 1 = 0.64 if the wage is w = 10. (c) Show why this firm does not maximize profits , if it chooses N = 0.64 when w = 10. (d) Explain intuitively, what should this firm do

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