Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

(a) Shelly's preferences for consumption and leisure can be expressed as U(C,L) = ( C - 200 ) ( L - 80 ). This utility

(a) Shelly's preferences for consumption and leisure can be expressed as U(C,L) = ( C - 200 ) ( L - 80 ). This utility function implies that Shelly's marginal utility of leisure is C - 200 and her marginal utility of consumption is L - 80. There are 168 hours in the week available to split between work and leisure. Shelly earns $15 per hour after taxes. She also receives $300 worth of welfare benefits each week regardless of how much she works.

Find Shelly's utility level when she works 30 hours per week (assume the price of consumption good p=$1).

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Macroeconomics

Authors: Robert J Gordon

12th edition

138014914, 978-0138014919

More Books

Students also viewed these Economics questions

Question

Describe what might be done to respond to a button click event.

Answered: 1 week ago

Question

6. How can a message directly influence the interpreter?

Answered: 1 week ago