Question: Suppose that you have the following utility function: U(L,Y) = LY + 2Y, where L is hours of leisure and Y is other goods. The

Suppose that you have the following utility function: U(L,Y) = LY + 2Y, where L is hours of leisure and Y is other goods. The price of Y is 1. For now

suppose that wages are your only source of income. You allocate 18 hours a day between work and leisure (and sleep during the remaining 6 hours)

suppose that your hourly wage increases to 2. How many hours of labour would you supply now?

Finally, imagine that you have received an inheritance which always pays you 8 dollars per day. The hourly wage is still 2. How many hours of labour will you supply?

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