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Consider a utility function:U(c,l)=(1)log(c)+log(l),where >0. the consumer has one unit of time,w= 0.75,= 0.8, andT= 1.0. Determine the consumer's optimal choice of consumption and leisure,

Consider a utility function:U(c,l)=(1)log(c)+log(l),where >0.

  1. the consumer has one unit of time,w= 0.75,= 0.8, andT= 1.0. Determine the consumer's optimal choice of consumption and leisure, and show this in a diagram.
  2. suppose w= 1.5. determine the consumer's optimal choice of consumption and leisure. Use a graph to show how and why the consumer's optimal consumption bundle changes, with reference to income and substitution effects.

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