Question: You need to decide how many hours should Bob spend at work. His total available time is 24h and he has no income rather than

You need to decide how many hours should Bob spend at work. His total available time is 24h and he has no income rather than salary. His current wage is $100 per hour and he only consumes apples which cost $5 per pound.

1. What is Bob's real wage (wage rate in terms of apples)?

2. Show Bob's budget set on the graph.

3. Denote by R Bob's leisure and by C his consumption. His utility function is U(R, C) = R C. What is his optimal time spent at work, his leisure time and his consumption of apples?

4. Assume a wage increase to $200. Is there any change in Bob's labor supply (you have to calculate it)? Why?

You need to decide how many hours should Bob spend at work.

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