Sonyas utility function is given by: U = C .25 L .75 ,MU C = .25C -0.75
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Question:
Sonya’s utility function is given by:
U = C.25L.75,MUC= .25C-0.75L0.75, MUL= .75C0.25L-0.25
Where C is income and she spends her entire income on consumption, L is the number of hours spent each day in leisure. Assume that her current wage rate is $12 per hour worked, she has no non-work income, and she can work as many hours as she wishes per day (not to exceed 24 hours of course).
- How many hours will Sonya choose to work, how many hours will she devote to leisure activities, and how much does she choose to spend on consumption each day? (Note: use the tangency condition and budget constraint to solve).
Related Book For
Microeconomics
ISBN: 9781464146978
1st Edition
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson
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