Shelly’s preferences for consumption and leisure can be expressed as U(C, L) = (C – 200) x (L – 80). There are 168 hours in the week available to split between work and leisure. Shelly earns $5 per hour after taxes. Shelly currently has no non-labor income. For the pre-class assignment today, you found that at a wage of $5 per hour, Shelly will work 64 hours, take 104 hours of leisure, and have $320 of consumption.
A. Graph Shelly's budget constraint.
B. How many hours will Shelly choose to work when she is maximizing her utility? How much leisure time will she have at that point? How much will she be able to consume?
C. Now suppose that Shelly receives $320 worth of welfare benefits each week regardless of how much she works. How many hours will Shelly choose to work with welfare? How much leisure time will she have at that point? How much will she be able to consume?
D. Take a close look at the utility function. Is there a minimum level of consumption and leisure that Shelly would need in order to achieve positive utility? Explain why you might expect the utility function to have these properties.
E. Suppose that Shelly qualifies for a welfare benefit of $500 per month. She does not lose the benefit if she goes to work. What wage would she need to earn to work a positive number of hours with the welfare benefit?
Answers: 3
Business, 21.06.2019 18:50, getsic
Which of the following is not a potential problem with beta and its estimation? sometimes, during a period when the company is undergoing a change such as toward more leverage or riskier assets, the calculated beta will be drastically different than the "true" or "expected future" beta. the beta of "the market," can change over time, sometimes drastically.
Answers: 3
Business, 21.06.2019 19:50, Pookaapoo8832
Which of the following best describes the economic effect that results when the government increases interest rates and restricts the lending of money? a. borrowing money becomes more expensive and there is less investment in production. b. the economy grows as investments result in larger profits. c. government spending drives up prices because of greater competition for goods and services. d. consumers save more money and spend less buying goods and services.
Answers: 2
Business, 21.06.2019 22:10, maxy7347go
There are more than two types of bachelors’ degrees true or false?
Answers: 1
Shelly’s preferences for consumption and leisure can be expressed as U(C, L) = (C – 200) x (L – 80)....
Mathematics, 19.08.2019 07:00
Mathematics, 19.08.2019 07:00
Chemistry, 19.08.2019 07:00