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utility function is U(C,L) = CL2




3. Alice?s utility function is U(C,L) = CL2. Wages=$11 and she has 24 hours to allocate between work and leisure.;1. Find her utility maximizing work and leisure hours.;2. What is her consumption?;3. Her grandmother decides to give her $25 indefinitely. Find her new utility maximizing work and leisure hours.;4. Now suppose she faces a time commute cost of 2 hours (total time loss commuting to and from work). How many hours will she devote to labor and leisure?


Paper#21332 | Written in 18-Jul-2015

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