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).

a. Assume that your hourly wage is 1. Write down your budget constraint. b. How many hours of labour would you supply when your hourly wage is 1? You can use any method you want. c. Now suppose that your hourly wage increases to 2. How many hours of labour would you supply now? d. 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?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Question 1 ( 4 Points ) Consider the labor supply and consumption of a person with the following utility function: U ( C , L ) = C 2 / 3 L 1 / 3 , where L is leisure time and C is consumption of...

Citizens of nation have an old tradition of hardwork, and believing in the notion of "Work-Hard, Play Hard". Given said, the average person has the following utility function: U = min(aL, BY) Where L...

Please answer the question in the picture in detail. Question 3 (10 points) : Consider a consumer who divides their time into labour and leisure, and have preferences over leisure (l) and consumption...

Suppose consumer with a given income I, who decides between two goods X and Y. Illustrate with help of indifference analysis the initial optimum of consumer. Now suppose that price of good X (Px)...

HHelp. me to solve the following attached questions. 4 Labor market equilibrium with proportional taxation Consider a model in which a household derives utility from consumption c and leisure 1...

Please don't consider the calculus aspect to answer the question because all the calculation methods will be provided. *MUW = marginal utility of work, MUL = marginal utility of leisure, MUH =...

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...

Bob is deciding how much labour he should supply. He gets utility from consumption of beer (given by C) and from leisure time (given by L), which he spends hanging out with his friend Doug. This...

Please don't consider the calculus aspect to answer the question because all the calculation methods will be provided. *MUW = marginal utility of work, MUL = marginal utility of leisure, MUH =...

The questions in this problem refer to the following game: Player 2 a. Determine if either player has any dominated strategies. If so. identify them. b. Does either player have a dominant strategy?...

If x - y + u + 2v = 1 x + y u v = 2, find du/dx and dv/dx

In the file ascii-art.py. you'll find a Python script that prints pictures to the console window, after open- ing and reading data from a compressed file. The objective of this question is to modify...

You are auditing the balance sheet for your client, Hawkeye Corporation. What should be the total amount of total longterm liabilities for Hawkeye Corp. as of 1 2 3 1 ? 2 0 4 ? Salary & Wages...

what is facility planning process and layout? how does it affect business and operations?

Do not take criticism personally, even if it is meant to be personal.

2. To understand that as a general rule it takes about 3 minutes before the other part(s) have made up a 90% impression of you.

3. To understand that the first impression means a lot, and it takes a lot of energy to change this first impression.