Person B is a mother of C (1 year old). B derives utility from income Y (i.e. a disposable income that she can spend on consumption goods other than childcare) and leisure L according to the utility function U(Y,L)=Y*L . She has non-labour income of $200 per day. Her time endowment is 16 hours per day that can be spent either on Leisure (which mostly consists of caring for C) or labour market work. If B works she has to leave c in the child care. B's wage is $20 per hour, while the childcare cost $5 per hour. B only uses childcare when she works. What is B's reservation wage? Round your answer to the first decimal point. Staying with the scenario in Q4. Compute how many hours B will work under these circumstances. Round your answer to the first decimal point. Stay with the scenario in Q4. Now suppose the government introduces the childcare subsidy that covers 100% of childcare costs of working parents. How many hours will B work under the new policy? Round your answer to the first decimal point

Person B is a mother of C (1 year old). B derives utility from income Y (i.e. a disposable income that she can spend on consumption goods other than childcare) and leisure L according to the utility function U(Y,L)=Y*L . She has non-labour income of $200 per day. Her time endowment is 16 hours per day that can be spent either on Leisure (which mostly consists of caring for C) or labour market work. If B works she has to leave c in the child care. B's wage is $20 per hour, while the childcare cost $5 per hour. B only uses childcare when she works. What is B's reservation wage? Round your answer to the first decimal point. Staying with the scenario in Q4. Compute how many hours B will work under these circumstances. Round your answer to the first decimal point. Stay with the scenario in Q4. Now suppose the government introduces the childcare subsidy that covers 100% of childcare costs of working parents. How many hours will B work under the new policy? Round your answer to the first decimal point

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.14P

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