Ms Katrina has eighteen hours available per day to allocate between Leisure and work. She has N$100 non - labour income and her wage rate per hour is N$25.00. a) Contract budget constraint equation b) Draw a budget line and make sure to include intercepts c) Calculate the slope of the budget line d) If Ms Katrina's utility function is , what combination of Leisure hour and income that will help to maximize her utility?
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Ms Katrina has eighteen hours available per day to allocate between Leisure and work. She has N$100 non - labour income and her wage rate per hour is N$25.00.
a) Contract budget constraint equation
b) Draw a budget line and make sure to include intercepts c) Calculate the slope of the budget line d) If Ms Katrina's utility function is , what combination of Leisure hour and income that will help to maximize her utility?
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- Susan obtains utility by consuming carrots C and enjoying leisure L. Suppose that she has a daily non-wage income Y of £100 and is paid a fixed hourly wage rate of £10 for every hour she works in a local coffee shop. Assume that Susan is a utility maximiser and is free to choose x hours of work per day where 0 ≤ x ≤ 10. Assume also that the unit price of C is £1. a) Suppose that L is measured on the horizontal axis and C on the vertical axis. Use these axes to draw the set of all C and L combinations that Susan can choose from. Write down Susan’s budget equation. b) Suppose that Susan’s preferences over carrots and leisure are expressed by the following utility function: U(C,L) = min{C, 10L}. Calculate Susan’s optimal consumption bundle, both algebraically and graphically. Calculate the value of MRS at the optimal choice. c) Suppose instead that Susan’s preferences are such that indifference curves in the L-C space are strictly convex to the origin, and that she chooses to work 5…Consider an individual whose utility function is U(C, R) = 2C - (4 - R) 2 where R is the amount of leisure the consumer experiences per day. Suppose that the individual normally sleeps T hours a day, and they can spend the remaining hours between work and leisure. The individual receives an hourly wage of w > 0 and has also an income of Y > 0 a day from non - labour sources. The price of consumption goods is p per unit.A firm produces at an output level where the marginal product of labor (MPL) is 50 units and the marginal product of capital (MPK) is 10 units. Suppose that the wage rate (PL) is $25 and the rental price of capital (PK) is $40. a.Is this firm maximzing profit? b.What should the firm do if it is not alocating its budget efficiently?
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- The weekly preferences over consumption (C) and leisure(L) are defined by u(C, L) = √C + 3√L. The person receives a weekly allowance of m from The hourly wage is $18 per hour, and the person can work up to50 hours each week (T = z + L = 50), where z is the number of hours spent working). a)How many hours will the person work if her allowance is m= $450 per week b) What is the smallest allowance m for which the person will stopworking altogether (z∗ = 0) for a wage of w = 18?Suppose that the owner of Boyer Construction is feeling the pinch of incrs associated with worker’s compensation and has decided to cut the wages of its two employees (Albert and Sid) from $25 per hour to $22 per hour. Assume that Albert and Sid view income and leisure as “goods,” that both experience a diminishing rate of marginal substitution between income and leisure, and that the workers have the same before- and after-tax budget constraints at each wage. Draw each worker’s opportunity set for each hourly wage. At the wage of $25 per hour, both Albert and Sid are observed to consume 12 hours of leisure (and, equivalently, supply 12 hours of labor). After wages were cut to $22, Albert consumes 10 hours of leisure and Sid consumes 14 hours of leisure. Determine the number of hours of labor each worker supplies at a wage of $22 per hour. How can you explain the seemingly contradictory result that the workers supply a different number of labor hours? (LO2, LO3, LO7)Q1: Suppose Labor and Capital are substitutes and the price of capital falls. All else equal, we should expect the labor select (supply, demand) Curve shift select ( up to the right, down to the left ) and for equilibrium wages to select (rise, fall) Q2: An individual has a utility function over Leisure and Income such that ?=?1/2?1/2 This individual has a budget constraint ?=?⋅(24−?)+? The best possible wage this individual can earn in the labor market is $2 per hour. This individual is $30 in debt (they have negative non-labor income). If this individual is earning a utility level of 4, which of the following are true? Group of answer choices The worker could be supplying 1 unit of Labor The worker could be earning $10 The worker could be supplying 8 units of labor The worker is maximizing their utility given their budget The worker's Marginal Rate of Substitution at the point where the budget constraint intersects the indifference curve is equal to -2