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Please answer E and F only Suppose that an individual's utility function for consumption, C, and leisure. L, is given by om, L] = c'ue

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Please answer E and F only

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Suppose that an individual's utility function for consumption, C, and leisure. L, is given by om, L] = c'ue This person is constrained by two equations: {1] an income constraint that shows how con- sumption can be nanced, C = wH + V1 where H is hours of work and V is nonlabor income; and {2] a total time constraint {T = 1] L + H = 1 Assume V = {1, then the expenditure-minimisation problem is minimise o w{1 L) at. U{C,L} = (3051.05 = {T {a} Use this approach to derive the expenditure function for this problem. {b} Use the envelope theorem to derive the compensated demand functions for consumption and leisure. {c} Derive the compensated labor supply function. Show that BIT-"jaw 3: II]. In working following pants ii is important not to impose the V = [1 condition until after taking all derivatives. {d} Asmme V 79 {1, determine uncompensated supply function for labor and compare with the compensated labor supply function 'om part {c}. {e} Determine maximum utility, [7, using the expenditure function derived in part {a}, assume V = E, {f} Use the Slutsky equation to show that income and substitution effects of a change in the real wage cancel out

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