Question: Suppose Abby's utility function over leisure (Le) and the consumption good x is: U (Le, a!) = (Le)2:z: You can assume that the price of

Suppose Abby's utility function over leisure (Le) and the consumption good x is: U (Le, a!) = (Le)2:z: You can assume that the price of good x is 1 and the hourly wage is $10. a) If the only income Abby has is what she earns by working, and she has a total of 18 hours available to work each day (so Le=18-L), then she will work hours. b) Now suppose Abby also receives a xed daily transfer of $45, on top of the money she earns by working (nothing else changes). Then Abby will now work hours each day. (Enter numerical values only, e.g. 0.5 instead of 1f2. You can round to 1 or 2 decimals if needed.)

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