Question 5 Suppose that a representative consumer has the following utility function for leisure I and consumption C. U(L, C) = C³/4 1\/4 The real wage rate, w, is competitively determined to be 10. The number of hours, h, available to the consumer is 24. The profits, t, distributed to each consumer are 200 and taxes, T, are lump sum at 100. a). Given the above, how much leisure would the consumer choose? b) Given the above, how much consumption would the consumer choose? c) Given the above, how many units of time will the consumer spend working? Question 6 Describe, briefly and in your own words, what total factor productivity means. Provide an example of a change in TFP. Question 7 What is the firm's profit maximizing condition, assuming that its capital is fixed? Briefly discuss, in your own words, intuitively what this condition means.

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter17: Capital And Time
Section: Chapter Questions
Problem 17.1P
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Question 5
Suppose that a representative consumer has the following utility function for leisure I and consumption
C.
U(L, C) = C³/4 1\/4
The real wage rate, w, is competitively determined to be 10. The number of hours, h, available to the
consumer is 24. The profits, t, distributed to each consumer are 200 and taxes, T, are lump sum at 100.
a). Given the above, how much leisure would the consumer choose?
b) Given the above, how much consumption would the consumer choose?
c) Given the above, how many units of time will the consumer spend working?
Question 6
Describe, briefly and in your own words, what total factor productivity means. Provide an example of a
change in TFP.
Question 7
What is the firm's profit maximizing condition, assuming that its capital is fixed? Briefly discuss, in
your own words, intuitively what this condition means.
Transcribed Image Text:Question 5 Suppose that a representative consumer has the following utility function for leisure I and consumption C. U(L, C) = C³/4 1\/4 The real wage rate, w, is competitively determined to be 10. The number of hours, h, available to the consumer is 24. The profits, t, distributed to each consumer are 200 and taxes, T, are lump sum at 100. a). Given the above, how much leisure would the consumer choose? b) Given the above, how much consumption would the consumer choose? c) Given the above, how many units of time will the consumer spend working? Question 6 Describe, briefly and in your own words, what total factor productivity means. Provide an example of a change in TFP. Question 7 What is the firm's profit maximizing condition, assuming that its capital is fixed? Briefly discuss, in your own words, intuitively what this condition means.
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