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Consider a household in our static model. The household can only work either full time, part time, or not at all. Assume that limo0+ U.(c,l)
Consider a household in our static model. The household can only work either full time, part time, or not at all. Assume that limo0+ U.(c,l) = too. 1. What are the possible optimal choices for the household when: (a) the household is receiving a negative net capital income, that is, T-T 0. (8 points) (c) Suppose the household chooses not to work. Does this imply that the household would choose not to work if it were free to choose its working hours? Explain. (10 points) Consider a household in our static model. The household can only work either full time, part time, or not at all. Assume that limo0+ U.(c,l) = too. 1. What are the possible optimal choices for the household when: (a) the household is receiving a negative net capital income, that is, T-T 0. (8 points) (c) Suppose the household chooses not to work. Does this imply that the household would choose not to work if it were free to choose its working hours? Explain. (10 points)
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