A. Consider the case of a single mother with two children, who is trying to decide how many hours to work each month. Suppose, due
A. Consider the case of a single mother with two children, who is trying to decide how many hours to work each month. Suppose, due to constraints such as child care, she is limited to working a maximum of 40 hours per week, for a total labor supply endowment of 160 hours per month. This mother has no other source of labor income, and if she works, would receive a wage of 6 Birr for each hour worked.
Assume that the mother's utility function is defined over money (C) and leisure (L), and takes the following form:
U = 3 log C + 5 log L
SolveThe mother's optimal choice of labor supply. How much money does the mother have for consumption?
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Authors: Christian Albright, Wayne Winston, Christopher Zappe
4th Edition
538476125, 978-0538476126
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