Jack has a utility function of the following: U(L, X) = min{L, X}, where L is leisure

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Jack has a utility function of the following: U(L, X) = min{L, X}, where L is leisure and X is consumption. If he works, he receives real wage w. Outside of the labor market, he has non-labor market income V. And his endowment of time, T, is normalized to 1. And the price of goods, p, is also normalized to 1.

(a) Please write down Jack's budget constraint. And draw the budget constrain on the graph and nd the intercepts on both axis and the slope.

(b) Consider the case where w = 0.8, and V = 0. Solve for the optimal hours of working for Jack, and the optimal consumption.

Posted Date: Jul 02, 2024 07:14 AM

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Jack has a utility function of the following: U(L, X) = min{L, X}, where L is leisure

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