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Hillary's preferences for consumptioncand LeisureLare represented by the utility functionu(L, c) = ln(L) +c. Assume that the price of stuff (consumption goods) has been normalized
Hillary's preferences for consumptioncand LeisureLare represented by the utility functionu(L, c) = ln(L) +c. Assume that the price of stuff (consumption goods) has been normalized to 1, and that the maximum amount of time available to her isT= 24 hours. All her income comes from the labor she supplies.
(a) If the wage rate isw= 20 dollars an hour, what is Hillary's optimal choice of consumption and leisure?
(b) Assuming thatw >1/24, write down the equation of Hillary's labor supply curve. Represent it graphically.
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