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Bob has 16 hours in a day. He splits his time between leisure, l, and labor, L. With the money he has, Bob buys consumption
Bob has 16 hours in a day. He splits his time between leisure, l, and labor, L. With the money he has, Bob buys consumption goods, c, priced at 1. Bob's utility from c and l is given by u(c, l) = 2c + l. Bob also has inherited an income of 10 units.
(a) Write Bob's budget constraint.
(b) Compute Bob's optimal choice of consumption, labor, and leisure if w = 1.
(c) Compute Bob's optimal choice of consumption, labor, and leisure if w = 10.
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