Question 2 Households: Two individuals, 1 and 2 inhabit a household. The utility of both individuals 2': 1,2 is given by: ui = 0.3ln(l) + 0.7ln(K) where K is the household public good which is given by: K = w1h1+w2h2 + 7E1 +712 where ni is nonlabour income of individual 2'. Each individual has a time endowment of T = 16. The nonlabor income of each individual is $50 (so m 2 n2 2 50). The wage of individual 1 is 101 = 10 and the wage of individual 2 is 102 : 5. (a): Determine the labor supplies of the two individuals, hl and hg if they behave non cooperatively. (b): Determine the labor supplies of the two individuals if they behave in an efcient manner, where labor supplies are determined by the household solving the following problem: most: 0.5m + 0.51152 1115,12 (c): Are both individuals better OH in the cooperative case? Explain why this is or is not the case