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When Anne saw the problem that Leslie was facing, she immediately recalled her suggestion to Ben for the health insurance problem in Problem Set 2.
When Anne saw the problem that Leslie was facing, she immediately recalled her suggestion to Ben for the health insurance problem in Problem Set 2. Anne suggests to Leslie that she should introduce a menu of allocations such that Eagleton residents voluntarily select the allocation (c, y) while Pawnee residents voluntarily select (ch, y.) . (Notice that Ben has suggested replacing labor supply / with output y, because the policy can no longer be based on 1.) j. Rewrite the utilities for both Pawnee and Eagleton residents in terms of con- sumption c and output y. Hint: output is linear in labor supply, sol = y marginal productivity * (2 points)
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