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(a) Jessica's utility for consumption and leisure is UfCJ.) = 2(C x L) so that her marginal utility of leisure lv1UL=(Cl'L)2 and marginal utility of
(a) Jessica's utility for consumption and leisure is UfCJ.) = 2(C x L)\" so that her marginal utility of leisure lv1UL=(Cl'L)"2 and marginal utility of consumption MUc=(UC)\"2. There are 168 hours in the week and she earns $22 per hour before tax. For her labour earnings she has to pay 25% tax to the government and she has a total of $200 weekly non-labour income independent of her working hours. As Jessica has a young child she must pay child-care costs which are $3 for each hour the child is at the day-care centre. Assume that the child stays at the day-care centre for the same duration as Jessica's working hours. Assume the price of the consumption good C is p=$1. Calculate the rate at which Jessica is willing to sacrice an additional leisure hour when she is already working 30 hours a week. Determine whether the market is sufficiently attractive for her to give up that extra leisure hour. (3 marks) (b) Suppose a rm has a production function of the following form: q='10'*(2l
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