Business
Business, 25.02.2020 17:02, mia2286

Exercise 3. Labor Supply (Cobb-Douglas) Each day you are endowed with 24 hours of time (T=24) that you can either spend working (L) or in leisure (l), so that T = L + l. The reason for working is so that you can earn an hourly income, w, and afford consumption of good, c. Assume that the price of the consumption good is normalized to one (p=1), so that your consumption is constrained by your wage income: c= WL a) You value both consumption, c, and leisure, l, and each day you cannot do without either one. Your daily utility is u =cl2. What is the MRS between consumption and leisure? b) Since your time constraint is T = L +l, then L=T-l. And since your budget constraint is CE WL, then c = w(T-). Rearranging you have c + wl = wł. The price of consumption is 1, the price of leisure is w, and the value of your time endowment is WT. Can you derive the labor supply? c) When the wage rate is w=10, what is c, l, and L? When the wage rate is w'=20, what is c', l', and L? When the wage rate is w"=30, what is c", l", and L"? d) In a graph with leisure on the horizontal axis, and consumption in the vertical axis, draw the budget constraint as it changes is w, w' and w", and label the three optimal bundles (c, ) that you found in part c. e) As the wage rate changes from w=10 to w'=20, can separate the substitution and endowment income effect for leisure?

answer
Answers: 2

Other questions on the subject: Business

image
Business, 22.06.2019 15:10, emilypzamora11
On december 31, 2013, coronado company issues 173,000 stock-appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-established price of $10. the fair value of the sars is estimated to be $5 per sar on december 31, 2014; $2 on december 31, 2015; $10 on december 31, 2016; and $8 on december 31, 2017. the service period is 4 years, and the exercise period is 7 years. prepare a schedule that shows the amount of compensation expense allocable to each year affected by the stock-appreciation rights plan.
Answers: 2
image
Business, 22.06.2019 20:30, smarty5187
(30 total points) suppose a firm’s production function is given by q = l1/2*k1/2. the marginal product of labor and the marginal product of capital are given by: mpl = 1/ 2 1/ 2 2l k , and mpk = 1/ 2 1/ 2 2k l . a) (12 points) if the price of labor is w = 48, and the price of capital is r = 12, how much labor and capital should the firm hire in order to minimize the cost of production if the firm wants to produce output q = 18?
Answers: 1
image
Business, 23.06.2019 00:30, Lindy1862
Greentel, a telecom giant, has been using the service of orpheus inc. for training its employees. according to a deal signed by the two companies, orpheus inc. is not only responsible for training greentel's employees but also for providing comprehensive administrative services to the telecom giant. in this instance, greentel engages in
Answers: 1
image
Business, 23.06.2019 01:50, adalan6986
Exhibit 34-1 country a country b good x 90 60 30 0 good ygood x good y 0 30 60 90 30 20 10 20 40 60 refer to exhibit 34-1. considering the data, which of the following term to? a. 1 unit of y for 1 unit of x b. 1 unit of y for 0.75 units of x c. 1 unit of y for 0.25 units of x d. 1 unit of y for 1.50 units of x e. all of the above s of trade would both countries agree 8. it -
Answers: 2
Do you know the correct answer?
Exercise 3. Labor Supply (Cobb-Douglas) Each day you are endowed with 24 hours of time (T=24) that y...

Questions in other subjects:

Konu
English, 25.04.2020 06:46
Konu
Biology, 25.04.2020 06:46
Konu
Mathematics, 25.04.2020 06:46
Konu
Mathematics, 25.04.2020 06:46