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?

Answers: 2

Show answers

Another question on Business

Business, 21.06.2019 21:20

Vital industries manufactured 2 comma 200 units of its product huge in the month of april. it incurred a total cost of $ 121 comma 000 during the month. out of this $ 121 comma 000, $ 46 comma 000 comprised of direct materials used in the product and the rest was incurred because of the conversion cost involved in the process. ryan had no opening or closing inventory. what will be the total cost per unit of the product, assuming conversion costs contained $ 10 comma 900 of indirect labor?

Answers: 1

Answer

Business, 21.06.2019 23:30

Select the correct answer. joshua runs a large manufacturing business that is listed on the stock exchange. his company made good profits in the previous financial year. he now plans to reward his shareholders with handsome dividends. under which category of activities in the cash flow statement would the company’s accountants place this outflow of cash? a. investing activities b. operating activities c. financing activities d. non-operating activities

Answers: 3

Answer

Business, 22.06.2019 05:10

1. descriptive statistics quickly describe large amounts of data can predict future stock returns with surprising accuracy statisticians understand non-numeric information, like colors refer mainly to patterns that can be found in data 2. a 15% return on a stock means that 15% of the original purchase price of the stock returns to the seller at the end of the year 15% of the people who purchased the stock will see a return the stock is worth 15% more at the end of the year than at the beginning the stock has lost 15% of its value since it was originally sold 3. a stock purchased on january 1 cost $4.35 per share. the same stock, sold on december 31 of the same year, brought in $4.75 per share. what was the approximate return on this stock? 0.09% 109% 1.09% 9% 4. a stock sells for $6.99 on december 31, providing the seller with a 6% annual return. what was the price of the stock at the beginning of the year? $6.59 $1.16 $7.42 $5.84

Answers: 3

Answer

Business, 22.06.2019 20:00

If a hotel has 100 rooms, and each room takes 25 minutes to clean, how many housekeepers working 8-hour shifts does the hotel need at 50 percent occupancy?

Answers: 1

Answer

You know the right answer?

Exercise 3. Labor Supply (Cobb-Douglas) Each day you are endowed with 24 hours of time (T=24) that y...

Questions