1) Calculate the hours of work (T-L) for the Income Leisure model under the following circumstances. Yn = 0, T = T, W = w and U = IL

Why do we use parameters and not numbers? (Hint= easy to change numbers rather than calculating every time)

2) Calculate the equilibrium level of wages under the following situation:

Situation I

Wages = 10,000 - L (Demand)

Wages = 1,000 + L (Supply)

Situation II

Wages = 10,000 - L (Demand)

Wages = 1,000 + ^{L 2}( Supply)