Consider the following model of labour supply. There is a representative worker with the following utility function: U(C,L) = C + 3L The budget constraint and time constraint are: C = wh + V h = T - L where w = 1,V = 500,T = 100. The notation is the same as question 1. a) Calculate the optimal leisure and consumption. b) Explain why we usually do not use this type of utility function to model the labour supply.

Consider the following model of labour supply. There is a representative worker with the following utility function: U(C,L) = C + 3L The budget constraint and time constraint are: C = wh + V h = T - L where w = 1,V = 500,T = 100. The notation is the same as question 1. a) Calculate the optimal leisure and consumption. b) Explain why we usually do not use this type of utility function to model the labour supply.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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